September | October 2013 | paymentscardsandmobile.com in this issue Card Notes Payment technology gets physical again EC payments Interchange caps hurt? Non-cash payments World Payments Report m-payments Biometrics can revolutionise m-payment security PCM_MA13_40pp.indd 39 20/03/2013 15:39 welcome

www.paymentscardsandmobile.com

September | October 2013 Gearing up for non-cash growth Volume 5, Number 5

Editor-in-chief and publisher The annual World Payments Report from RBS and Capgemini has established itself as a major Alexander Rolfe benchmark publication for the payments industry in tracking and analysing trends in non-cash Tel +44 1263 711 800 [email protected] payments worldwide. PCM was given a sneak preview of this year’s report, which makes for very encouraging reading for the payment industry. All forms of non-cash payments, such as Editor Victoria Conroy debit cards, credit cards, e-commerce and mobile payments are growing strongly globally, Tel +44 1263 711 800 particularly in the emerging markets. [email protected] However, one of the notable findings of this year’s report was in relation to mobile payments: Contributors despite strong growth expectations, the report has uncovered a surprising black hole between Paul Asare-Archer Marie Walker estimated usage and actual usage – in some cases the gap is as much as 50%. Clearly, this Head of Business Development highlights the need for more timely and accurate statistical collection by regulators and central Wendy Sanders banks, along with other stakeholders, if m-payments are to fulfil their true potential. Tel +44 1263 711 801 Fax +44 1263 456 100 Another factor touched on in the report is a subject that PCM is tracking with interest, along [email protected] with the rest of the industry – the rise of virtual currencies. In less than a year, the pace of General Manager activity in this field has been breathtaking and regulators around the world are struggling to Gemma Haywood keep up. While some regulators and central banks are of the opinion that the likes of bitcoin Tel +44 1263 711 800 Fax +44 1263 456 100 should be illegal, others regard them as being just as valid a payment method as cards and [email protected] coins, which is muddying the picture for consumers and the industry. Subscriptions and General Kaye Skinner Meanwhile, the European Commission has finally published its proposals on interchange Tel +44 1263 711 800 regulation in the European Union. As expected, the proposals aim to introduce maximum Fax +44 1263 456 100 levels of interchange fees for transactions based on consumer debit and credit cards, along [email protected] with a ban on surcharges. While it’s not surprising that the payment industry has come out Address fighting, what is surprising is that some pro-consumer groups are also urging the Commission Payments Cards and Mobile The Stable, Hall Yard to rethink its proposals, arguing that interchange caps will ultimately hurt and not help Kelling, Holt consumers – merchants stand to gain the most from the caps as they stand. NR25 7EW United Kingdom It is now up to the industry to galvanise themselves ahead of what is expected Cover, Design and Origination to be a fiercely-fought battleground over this long-running issue. www.klg-design.co.uk Victoria Conroy, Printing Micropress Printers Editor, Payments Cards & Mobile

Average net circulation July 2011-June 2012: Printed 8924 • Digital 708

All rights reserved. No part of the publication may be reproduced or transmitted in any form without the publisher’s prior consent. While every care is taken to provide accurate information, the publisher cannot accept liability for errors or omissions, no matter how caused.

Payment Cards and Mobile™ is owned and published by PaymentsCM LLP ISSN 1759-829X © PaymentsCM LLP 2013

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PCM_MA13_40pp.indd 39 20/03/2013 15:39 contents

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news in brief features 16. Cover story – 6-7. The payments world in 60 days Digital currencies: a boon or scourge? PCM looks at how emerging (and 12. China UnionPay extends lead unregulated) methods like bitcoin could over Visa and MasterCard impact the payments industry. In less The number of payment cards worldwide than a year, the pace of activity has been increased by 12% in 2012 to reach a breathtaking. ■ landmark 10 billion, according to a new report from research and consulting firm Retail Banking Research (RBR), which also found that China UnionPay has continued to extend its lead over other card schemes as a result of continued rapid expansion of the Chinese card base. 8 ■ Risk-based segmentation not relevant for m-payments. ■ UK has lost 40% of bank and building society branches card notes 18. EC payments – since 1989. ■ 8. Payment technology gets Interchange caps hurt? physical again 14. Bank IT costs set to increase Proposed caps on debit and credit It’s only over the last few years that The issue of core system replacement is interchange across the EU have drawn consumers worldwide have become at the fore once again, with new research strong responses from players on all sides familiar with using contactless from Deutsche Bank finding that banks of the industry. Has the Commission fully technology and mobile phones to make operating ageing IT platforms can expect understood what it is proposing? ■ payments – but could these methods to experience a material increase in find themselves consigned to the bin just running costs over the coming years, 20. Non-cash payments – as they are starting to take off? ■ only partially offset by the introduction World Payments Report of smaller cheaper-to-run branch outlets. US judge and Federal Reserve in debit The annual World Payments Report from RBS ■ Fed considers faster payments and fee fight. ■ and Capgemini is a major benchmark for the mobile. ■ Apple forgoes NFC again. ■ 10. Cash usage set to plummet payments industry in tracking and analysing even further trends in non-cash payments worldwide. ■ The UK Payments Council is predicting that UK consumers will turn their backs on cash over the next 10 years as cards and mobile payments continue their ascendancy. ■ Security fears hold back mobile payments. ■

4 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com contents 28

issuing & acquiring e-commerce

22. OP-Pohjola selects Equens as card 32. Australian PSPs roll out MasterPass processing partner MasterCard has announced that 16 European payment processor Equens has contactless Australian payment service providers been selected by Finland’s OP-Pohjola 28. Visa showcases Slovakia as a (PSPs) will introduce MasterCard’s Group as its new card processing partner contactless leader MasterPass. ■ WorldPay e-commerce under a long-term contract for card Visa Europe has highlighted Slovakia as transaction volume grows 45%. ■ services. ■ mPOS World brief by Empiria a showcase market for the adoption of China to become largest online market. ■ Group – Redefining card acquiring with contactless technology, with 1.43 million Facebook pilots e-commerce system. ■ “Rich Merchant services”. ■ cards in circulation recording one million contactless transactions per month. ■ products risk & compliance Octopus to offer mobile NFC. ■ e-Revenue Gateway partners with ElectraCard for 35. Oberthur selected by Movistar Chile 22. The changing face of UK contactless. ■ and Banco Santander Chile regulation and the forthcoming FCA 29. First NFC-enabled iPhone prepaid Oberthur Technologies has been selected Thematic Review mobile wallet launches in Europe by Movistar Chile and Banco Santander Having superseded the Kalixa Group, DeviceFidelity and Chile to be their Trusted Service Manager Authority on 1st April 2013, the Financial MasterCard have announced the UK (TSM) and provide an end-to-end solution Conduct Authority has stuck true to its launch of the moneto prepaid wallet. for their NFC pilot. ■ Monitise, Visa Europe bold vision to be far more proactive than ■ RBC launches cloud-based NFC and IBM accelerate cloud m-commerce. ■ its predecessor. ■ m-payment service. ■ EMVCo qualifies FIME’s automated RF test tool. ■ launches in the UK. ■ mobile payments

26. Biometrics can revolutionise contracts m-payment security 37. Cardtronics acquires Payzone UK With the explosion in smartphone usage, 30 and German ATM businesses the number of payments done via mobile Payzone Group has agreed to sell its devices has significantly increased over ATM business in the UK and Germany to recent years. ■ EC allows Telefonica digital global ATM services provider Cardtronics. ■ payments service. FNB taps instant ■ Giesecke & Devrient to take over UK’s ■ pos terminals messaging for mobile money transfers. Currency Tech. ■ D+H closes $1.2bn 30. Groupon moves into Harland acquisition. ■ DSIA acquires 27. Consumers want POS terminal market Emmecom. ■ CVC Capital buys . ■ banks to lead way in Groupon has linked up with POS terminal mobile manufacturers and European smartphone to integrate its Breadcrumb service with conferences shoppers would be more the companies’ respective terminals. 38. Industry gears up for Cartes 2013 confident engaging in ■ Swiff chip and PIN approved by Visa mobile commerce if they Ready programme. ■ The Cartes 2013 Secure Connexions could do so using services launches Chase Checkout. ■ Event will be taking place at the Paris- provided by their bank. ■ Shuttle mPOS now available in 17 Nord Villepinte Exhibition Centre from PayPal launch Beacon. ■ European countries. ■ 19 to 21 November. ■ www.paymentscardsandmobile.com payments cards and mobile | September | October 2013 5 news in brief

A Russian man who managed to Several small businesses in the Irish town US payments firm has rewrite the terms of his of Wexford are ditching cash in a two- launched a mobile tool designed agreement, without the provider noticing, month trial organised by the Irish central bank. to help marketplace owners manage the has successfully sued the bank for breach of Between 16 September and 17 November, all relationship between buyers and sellers contract. Having received an unsolicited cash transactions at the 240 participating while cutting their regulatory burdens. credit card offer from Tinkoff Credit Systems businesses will be rounded to the nearest €0.05. Braintree says that its new service, which in 2008, the man rewrote the small print Prices of individual goods and services will is free to existing customers, makes it easy with more favourable details, including an remain unchanged, with only the total bill for buyers to pay in a single touch and unlimited line of credit, zero per cent rounded. The experiment is part of Ireland’s sellers to receive money directly on their interest rate and no fees. Tinkoff failed to National Payments Plan by the central bank. mobile devices. Developers can imple- check the details, signed off on the ment the service through Braintree’s API, agreement and sent the man his card, which A new system has been launched in with merchants able to customise how he used for two years before the bank the UK to enable bank customers to and when they pay their community decided to terminate it. A Russian court their current account from one bank to members and specify collection fees on ruled that the revised contract was valid another more quickly. The free service means every transaction. and made him pay the that switches will be completed in seven working days, down from the current average balance he owed but Virtual Piggy, a US company which of 18 to 30 days. The service, which has cost not the extra charges. aims to help children safely man- the banking industry around $750 million, has age their money online, has integrated been in the pipeline for two years, having with social game Habbo Hotel to enable Barnaby been recommended by the Independent players to buy virtual credits. Habbo Hotel Jack, a hack- Commission on Banking. claims over 10 million unique visitors per er who gained infamy month, 90% of whom are aged between for hacking into ATMs and making them mPOS player Square has been fined 13 and 18. Players can now purchase the dole out unlimited amounts of cash, has $507,000 fine by the Florida Office of in-game currency credit from their died in mysterious circumstances at the age Financial Regulation for operating in the state Virtual Piggy wallet, which is of 35. Jack had demonstrated his ATM hack- without a money transmitter licence. Square controlled by parents to make ing technique at several technology confer- has consented to the regulator’s finding that sure children do not overspend. ences around the world, and had also it had engaged in business as a money trans- gained notoriety for planning to demon- mitter in Florida without first getting a licence. PerkStreet Financial, a US online strate hacks on pacemakers and implanted Square applied for a licence in November 2012 financial services start-up which defibrillators. but was fined because it had already been operating in the state since early 2010. offered customers cashback rewards on spending, is closing because of The European Commission has Visa Europe has appointed Nicolas lack of funds. The company says that having approved plans by Spain’s CaixaBank, Huss as its new president and CEO, failed over the last six months to secure new Santander and Telefónica to set up a joint replacing Peter Ayliffe. Huss was previously funding, it will cease all operations on 26 venture offering digital services, including a CEO of Apollo Group’s Avant credit card September. PerkStreet worked with mobile wallet. The Commission has business in Spain and Ireland. Before that, he Bancorp Bank and Provident Bank to offer concluded that the planned venture did not worked for Bank of America as the MBNA customers online current accounts with raise competition concerns, as there are European collections and portfolio cashback rewards on debit card spending. already several competing digital wallet optimisation executive for the card business, The firm paid out around $4 million in perks providers in Spain, with more in the pipeline. and was CEO for Spain at GE Money. in total.

6 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com news in brief

VeriFoneUK m-com has- had the wind taken out VisaUS start-up is working ByteLight withis preparing several to ofmerce Sail, com its -app and dongle-based Indiantrial a bankslight field in order communications to utilise panysystem CloudZyncfor turning smartphones into card (LFC)the country’s reader in biometrics-based Chinese stores, enablingnational hasacceptance signed updevices. 280 Having failed to gain shoppersidentity system to use to their bring mobile financial phones services to merchantstraction with for themerchants, VeriFone will accessand electronic targeted paymentsloyalty rewards. to millions The LFC of launchinstead offof er theits technology to banks. Sail readerspeople. emitThe ‘Sarala glowing Money’ light account containing from a mobilewas launched wallet, in May 2012, but according uniqueVisa, Axis signal Bank, that HDFC any Bank,camera-equipped ICICI Bank, whichto the company,will let cus the- standalone economics smartphoneIndian Overseas can pick Bank up, and without the Statethe need Bank to tomersof micro-merchant download acquiring ultimately unlockof India the is designedhandset, tolaunch solve athe check-in long- aproved free app to andbe unprofi load table. applicationstanding problem or search of for how the to store authenticate they’re in. it with funds from Withthe manythe reader millions plugged of Indians into awithout store’s their bankVietnamese account, payment switch operator existing POS bank systems, accounts it can securelyor adequate verify enablingSmartlink them isto working with Singapore customerforms of locationID. They forplan mobile to tap loyalty into andthe opentech vendor the walletTagit to build a mobile bank- redemptiongovernment’s programmes. Aadhaar national identity withing service.a PIN and Tagit’s select Mobeix a payment platform option will at system which uses fingerprint and iris Insight is participatingbe available to retailers. over 40 Themillion app cardholders automati- biometricMasterCard information and Visato verify have usersagreed and to callybelonging generates to Smartlink’s a unique more QR code than which 50 mem- the authoriselicense payments. their respective There are UScurrently debit everything! customerber banks. then Vietcombank presents towill the be shopthe fi assis rst to- technologies210 million Aadhaarto each other card to holders, help ease with the tantroll out to scan.the service, CloudZync enabling says customers that, unlike to EMVthe government migration in planningthe US. Visa, to expandMasterCard, this In-depth analysis, manydownload card an schemes, iOS, Android, it does BlackBerry not charge or Java its Discoverto 600 million and American by 2015. Express have laid out merchantsapp that can any be set-up used for fees account or administration information a roadmap for the migration to EMV in the US, industry snapshots, news costsqueries, to makefund transfers,payment billand payments no additional and with liabilityJust 3% switching of UK toorganisations retailers that havehave in brief and authoritative hardwaremobile top-ups. is required. Through the Tagit system, not upgradedmade preparations in October 2015.for the Visa intro- and Smartlink customers will also be able to con- MasterCardduction of SEPA have for directnow debits,made laggingcertain features – Payments nect withMembers third parties of a suchUS cybercrimeas utility compa- ring proprietarybehind rivals EMV in chip France technologies and Germany available as Cards and Mobile’s nies and government agencies. which trafficked more than 95,000 tothe each countdown other and toother the networks, 2014 migration meaning authoritative, impartial, stolen credit card numbers have been jailed thatbegins. a debit The chip survey transaction of 300 originating businesses from in Royal Bank of Scotland, Lloyds following a trial in New York. The members aFrance, single chipGermany application and canthe beUK routed conducted by the editorial coverage TSB and NatWest in the UK are in were part of an internet-based criminal enter- merchantby Edgar toDunn Visa, &MasterCard Company or on any behalf other USof separates hype from a generous mood, having set aside £10 prise, dubbed the “Western Express PINSteria, debit finds network that almostthat signs 70% up. of European million to refund customers who forgot happening within the Cybercrime Group”, which between 2001 and businesses are aware of SEPA in general, to pick up cash dispensed at the ATM. The Isis, the US m-commerce joint venture 2007 was dedicated to trafficking in stolen and more than 80% of businesses have payment cards and banks are set to compensate hundreds established by a group of US telcos, credit card numbers and other personal iden- heard about SEPA Direct Debit in France mobile payment of thousands of customers who made a will launch its NFC-based wallet nationwide tifiers. They sold thousands of stolen credit and Germany. However, only 26% of UK withdrawal at the ATM but walked away later this year. The Isis Mobile Wallet uses NFC industry. card numbers though internet forums, mak- businesses are aware of the mandate. without the cash. Unlike other banks which technology to allow consumers to pay, ing millions of dollars, which was mainly paid automatically re-credit consumer accounts redeem coupons and present loyalty cards Timely insight insight - in digital currencies such as Egold and Sweden’s Swedbank is piloting when the machine retracts the forgotten with a tap of their smartphone. The venture, Webmoney, and then used a company called the use of mobile couponing with on paperon paper - on screen cash, the banks diverted the funds into their owned by US telcos AT&T Mobility, T-Mobile Western Express to launder the money. merchants in Uppsala, the country’s subscribe now! own reserves account and only paid up if USA and Verizon Wireless, says it is now on screen fourth-largest city which is attempting the customer asked for a refund. finally nearly ready for a full roll-out across on-line PayPal has struck a deal with money to eradicate cash as part of a local crime- Visit: the US following extensive trials. UStransfer start-up specialist Movenbank, MoneyGram which which has fi ghting initiative. Swedbank is trialling the subscribewww.paymentscardsandmobile.com now! enablespositioned its 55 million itself US as aaccount mobile-only, holders card- to use of MasterCard’s and click ‘Subscribe’ www.paymentscardsandmobile.com withdrawless, branchless money bank, at MoneyGrammay be forced locations to off er mobile application aroundcompanion the country. plastic Customerscards to customerscan now initi in- Koy with high ateorder a withdrawalto be compliant online with or MasterCard via their mobile rules. street merchants andMovenbank then pick is working up the with cash MasterCard at any on of a who can use the MoneyGram’splanned February thousands 2013 launch of whichsites. willPayPal see app to post deals customers willissued also with be ablecontactless to load stickersmoney to subscribers that intothat theytheir can accounts attach toat theirselect mobile MoneyGram phones, can be redeemed locationssays founder in and Dallas, CEO NewBrett YorkKing. andHowever, San from the user’s Francisco,he maintains with that a wider the fi roll-outrm is still following. “anti-card”. smartphone.

www.paymentscardsandmobile.compaymentscardsandmobile.com paymentspayments cards cards and and mobile mobile | September | January || FebruaryOctober 2013 7

PCM_JF13_40pp.indd 7 28/01/2013 11:49 card notes

US US judge and Federal Payment technology gets Reserve in debit fee fight A US judge has ruled that the Federal physical again Reserve disregarded the intent of the US Congress by setting too high a cap on interchange fees for debit card t’s only over the last few years that con- transactions. sumers worldwide have become familiar The Durbin amendment to the Iwith using contactless technology and Dodd-Frank financial law required the mobile phones to make payments – but Fed to ensure that debit swipe fees could these methods find themselves con- reflected the actual cost of processing signed to the bin just as they are starting to card transactions. In 2011, the Fed set take off? A few recent developments in the the cap at $0.21 per transaction, rather area of futuristic payment technology are bizarrely, tap-dancing, to make payments. than the $0.12 limit proposed in earlier going far beyond what is now in the mar- Her project, entitled ‘Money No Object’ consultations. ketplace and taking biometric technology relies on RFID tags and readers that are In response, several US merchants to a whole new level. worn by the merchant and customer and filed a lawsuit against the Fed and were At the recent TechCrunch Disrupt technol- transmit payment data when physical con- backed by Washington district court ogy event held in the US in early September tact is made. Hinder says the work questions judge Richard Leon in mid-August 2013, one innovation was unveiled which concepts of value, explores alternative eco- 2013, who granted their motion. lets consumers make a payment using a nomic ideas and considers a new signifi- In his ruling, Leon stated that unique hand gesture, dubbed a ‘secret cance for material and physical currencies the Fed had “clearly disregarded payment handshake’. Matthew Drake, an ‘in an increasingly immaterial world’. Congress’s statutory intent by inap- employee of advertising firm 22squared, According to Hindler, the hug-and-pay propriately inflating all debit card demonstrated the technology which is concept could be used in a cultural institu- transaction fees by billions of dollars”. based on the Leap Motion gesture control- tion, as a reinvention of the clear plastic However, after an outcry from ler, combined with a shopping cart POS API. donation box. Visitors could buy wearable US banking industry groups which Should the technology prove success- objects from gift shops, load them up with claimed that they would need to ful, consumers will no longer need a card credit and use them to make purchases, charge the fees to offset the costs of or indeed a mobile phone or any other “gaining some alternative emotional value offering debit cards, the Fed respond- physical form factor. According to Drake, to their payment transaction”. ed with an appeal against Leon’s rul- as long as a merchant’s POS system works Meanwhile, online payment giant PayPal ing, and it likely that the Fed’s cap will with the secret handshake software and is trialling a ‘pay-with-face’ technology in remain in place until the appeals pro- the Leap Motion controller, users can the UK, based on mobile payment technol- cess has been concluded. No timeline make a payment with just their hand ogy which lets customers verify themselves has yet been set out. and a sequence of gestures which would at the POS using a photo and their first “The Federal Reserve’s decision to approve the transaction and charge funds name. The new feature, called ‘check in’, appeal is the right thing to do for con- to an account linked to the secret hand- is embedded within PayPal’s Android, iOS sumers who shake via an online dashboard. and Windows apps and highlights nearby value debit Fee Fall US debit merchant processing Drake added that if the solution was shops and restaurants that accept PayPal. cards and the fees paid as a pecentage of purchase volume combined with facial recognition and other The customer then checks in by clicking financial insti- 1.5 identifying data like a name and phone on the retailer and pays by sliding a tutions that number, the transaction process could be down in the app. Once a user has checked serve them,” 1.0 made even more secure. in, their name and photo appears on the Frank Keating, Elsewhere, RFID tags are being experi- shop’s payment system, and when they president of 0.5 mented with by artist Heidi Hindler, who is agree the amount to be paid, the cashier the American 0 developing a ‘hug-and-pay’ system, incor- charges them by clicking on the image. The Bankers 2008 ‘09 ‘10 ‘11 ‘12 porating ‘wearable’ technology allowing customer gets an alert on their phone to let Association, Source: Nilson Report, The Wall Street Journal. users to use physical gestures like hugs, them know how much they’ve paid, as well said. ■ high-fives, handshakes, and somewhat as PayPal’s usual e-mail receipt. ■

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UK Security fears hold back Cash usage set to plummet mobile payments UK consumers are being put off mak- even further ing mobile payments through existing providers by security fears, lengthy sign-up processes and problems mak- he UK Payments Council is predict- transactions in 2012 to 186 million in 2022. ing payments outside of individual ing that UK consumers will turn their Meanwhile, another survey states that schemes, according to new research Tbacks on cash over the next 10 years UK consumers foresee the demise of published by UK mobile payments as cards and mobile payments continue cheque books and some coins in the near scheme Zapp. their ascendancy. The number of cash pay- future as they are displaced by mobile The survey of 2,000 UK consum- ments made in the UK will fall by a third and biometric payments. According to a ers found that just 17% of consumers from 21 billion in 2012 to around 14 billion survey from UK processor WorldPay, 77% have made a mobile payment and in 2022, the Council predicts. of surveyed UK consumers anticipate that the majority (60%) of these payments In contrast, consumer card usage will rise certain coins will have been discontinued were limited to simple bank transfers by 75% from nearly 10 billion payments in within 10 years, while 76% anticipate the between accounts rather than paying 2012 to around 17 billion in 2022, with debit end of the cheque book. for goods and services. driving the growth. In contrast, most respondents see elec- Respondents were asked which fac- Mobile payments and internet banking tronic money methods on the rise, with tors prevented them making mobile will help drive up consumer use of one-off nearly two-thirds believing that they will payments, with half saying they saw payments from their accounts from 356 regularly buy purchases via their mobile current mobile payment options as a million payments in 2012 to around 1.5 bil- handset or other card payment methods. security risk and one in ten saying com- lion in 2022. Cheque usage is expected to A significant minority also expect bio- plex registration processes put them fall significantly, from 477 million consumer metrics to become increasingly common: off. Of those already making mobile around half believe payments, one in five (20%) said there UK payment and cash acquisition volumes summary they will be using fin- are not enough people and places to

Number of transactions millions Annual volumes gerprint recognition make payments and 18% said it was dif- 2011 2012 2022 (forecast) systems to autho- ficult to pay people who don’t use the Cheques For payment 934 823 334 rise payments, while same mobile payment system. For acquisition 36 25 7 All cheque transactions 970 848 341 another 39% predict However, the study also found a Plastic card payments that facial recognition strong appetite to pay for a wide range Credit/charge/store cards 2,160 2,234 3,480 Debit cards 7,308 7,649 13,776 or iris scanning tech- of items if a simple system using exist- All plastic card payments 9,468 9,883 17.246 nology will be a feature ing bank accounts and mobile phones ATM withdrawals 2,874 2,915 2,633 All plastic card cash acquisition 2,911 2,960 2,663 in a decade and 32% was available that didn’t need addition- All plastic card transactions 12,379 12,844 19,920 believe that they will be al registration. 86% of those already Source: 2013 UK payments statistics report. able to speak to pay. ■ making mobile payments said they would make more payments with such a system. In total 40% of all respon- Transport for London looks towards cashless future dents said they would use this type of payment system which is a 33% Following its successful adoption of con- with around 1,000 new users each day. uplift from a similar study conducted tactless payment cards, UK transport body According to Transport for London, sav- in February 2013. Transport for London (TfL) has opened a ings of up to £24 million per annum by Peter Keenan, CEO of Zapp, said: public consultation on proposals to remove 2019/20 will be expected due to reduc- “The research paints a picture of pent the option to pay by cash on all bus services tions in the cost of handling cash over the up demand and frustration. People London in 2014. network. want to pay with mobiles, but they TfL says that cash fares are expected to The consultation process will run until need to be convinced that payment is fall to less than 1% of total bus journeys this October 2013, at which point the transport secure, and it has to work everywhere year. Currently around 23,000 trips per day authority will submit its proposals to the and be totally hassle-free.” ■ are made using cards, Mayor of London for approval. ■

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UK Risk-based segmentation not relevant for m-payments China UnionPay extends lead According to new research from over Visa and MasterCard Auriemma Consulting Group (ACG), which looked at unique consumer seg- ments based on consumers’ interest he number of payment cards world- Plastic’s fantastic and usage of mobile and emerging wide increased by 12% in 2012 to Payments* processed worldwide Number of cards payments, no significant differences Treach a landmark 10 billion, according in circulation, m existed based on risk profiles or credit to a new report from research and consult- 0 2 4 6 8 10 lines, meaning the traditional risk- ing firm Retail Banking Research (RBR), Visa 2,349 based segmentation used by banks is which also found that China UnionPay has MasterCard 1,059 not relevant for mobile and emerging continued to extend its lead over other UnionPay 2,949 97 payments. Instead, attitudinal segmen- card schemes as a result of continued rapid JCB 77 tation should be used to better align expansion of the Chinese card base. Diners Club 6 with consumer needs. According to RBR, strong growth in devel- Credit Debit & prepaid According to the research, mobile oping markets will drive the global market Source: Nilson Report. *Including cash withdrawals adopters and enthusiasts were found to 13.6 billion cards by 2018. With 10 billion to be highly interested in all potential cards in circulation worldwide, this corre- Visa and MasterCard are issued in a much ways of making mobile purchases and sponds to an average of 2.3 cards per adult. larger number of countries than UnionPay, payments. They were most strongly As the banked population grows in devel- but in both Asia-Pacific and the Middle interested in making mobile payments oping markets, card numbers will increase East and Africa (MEA), Visa and MasterCard using contactless (93% of enthusiasts rapidly, rising to around 13.6 billion cards brands together account for less than half interested), mobile wallets (90% of worldwide by 2018. of cards issued. enthusiasts interested), and making China UnionPay continues to benefit from There are many countries, not just in MEA, payments by using a unique barcode the rapidly expanding Chinese banking where domestic schemes are demonstrat- through a mobile payment app (84% market. With a share of 34% of the global ing impressive growth. These include ELO of enthusiasts interested). card base, RBR indicates that UnionPay in Brazil, which is targeted at low income Matt Simester, managing director extended its lead over the other card customers and people claiming benefits, of ACG’s Payments Insights Practice, schemes in 2012 as a result of continu- and CMI in Morocco, which is aimed at said: “To gain consumer loyalty and ing impressive growth in card numbers customers who rarely travel outside the usage, mobile payments must be well in China. UnionPay’s volume and value of country. In India, RuPay’s appeal is partly designed and solve for a clear consum- payments remains considerably lower than the result of lower processing fees than the er ers if they want to grow adoption those of Visa and MasterCard, however, international schemes (a common feature of and usage.” ■ owing to low card usage in China, where domestic schemes) making it more attrac- more than 99% of UnionPay cards are found. tive to banks. ■

UK has lost 40% of bank and building society branches since 1989 Declining branch numbers 20,000 More than 40% of UK bank and building in the fall of branch networks, the rate of Banks Building Societies society branches have disappeared since closures has actually slowed in recent years. 15,000 1989, although the rate of closures has Between 2003 and 2012, the rate of decline declined since the turn of the century, has been -1.7%, compared to -2.5% between 10,000 according to research from Nottingham 1995 and 2003. The research also reveals that University, which found that between 1989 branches have been closing at a faster rate in Number of branches of Number 5,000 and 2012 there was a net loss of nearly more deprived parts of the country, with the 7,500 branches. least affluent third of the population bearing 0 Although the rise of online and mobile the brunt of two-thirds of net closures from 1989 1995 2003 2012 Source: University of Nottingham. banking are often cited as driving forces 1995 to 2012. ■

12 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com FSM-256GÇóPayments International A4-cs4.pdf 1 3/15/2012 7:46:14 AM

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EUROPE Bank IT costs set to increase Apple forgoes NFC again

he issue of core system replacement operating costs and will be encouraged by The recent launch of Apple’s iPhone 5C is at the fore once again, with new an exponential increase in regulatory atten- and 5S models has disappointed NFC Tresearch from Deutsche Bank finding tion given to operational IT risk. enthusiasts once again as the tech giant that banks operating ageing IT platforms The rise in IT spend will be offset by a 5% appears stubbornly unconvinced by can expect to experience a material increase decline in branch costs, as banks look to the merits of the technology. However, in running costs over the coming years, only introduce smaller banks with fewer staff. while the inclusion of a biometic fin- partially offset by the introduction of smaller Some countries (Italy, Spain) are over-served gerprint scanner on the 5S model has cheaper-to-run branch outlets. by existing networks but overall we expect eliminated the need for password entry According to the research, most big bank branch numbers to edge lower but not col- on Apple’s iTunes and app platforms, core systems rely on too many applications lapse,” states the report. It adds that new the path is still open for the inclusion of patched too many times to cope with rising branches will likely incorporate cheaper NFC in the future. transaction volumes, regulatory change set-up costs with increased flexibility. The fingertip scanner, Touch ID, is and digital channel changes in particular. The benefits of a more nimble branch strat- built into the home button of the 5S and Deutsche Bank forecasts that these factors egy will include higher customer transaction uses a -cut sapphire crystal along will drive up to a 10% increase in overall volumes with little cost increase, quicker prod- and sensor to take a high-resolution uct launches and increased image of a user’s fingerprint. The sensor Digital channels increase customer interaction dramatically customer loyalty. removes the need to activate the device “We see Big Data as a by entering a PIN code. All fingerprint 25 information is encrypted with Apple >20 key driver of this in time, 20 given the requisite invest- stating that the information will not be ment by banks,” the report stored on the company’s servers. 15 adds. “Combined with the Speaking to PCM, Neil Garner, CEO 10 very significant upside and founder of NFC m-commerce com- 6 to returns when interest pany Proxama, said: “Apple’s desire to 5 rates rise, we think that incrementally build its own platform <1 0 retail banking remains a ecosystem rather than integrate with Average visits per active customer per month per customer active per visits Average Branch Online Mobile generally attractive invest- others comes through loud and clear Source: Monitise company data. ment prospect.” ■ with the iPhone 5S. It’s of particular interest to see Apple enhancing user authentication and device security with Fed considers faster payments and mobile the home button fingerprint swipe. This also makes payments through The US Federal Reserve is seeking public A recent analysis of the US payment sys- iTunes even simpler and more secure, input on a set of new policy ideas aimed tem conducted by the Fed highlighted criti- which sets the bar for other retail pay- at modernising US retail payments sys- cal issues around the need for faster, near ments services. tems, while at the same time addressing real-time payments, closed payment com- “Apple is now the only major phone key themes such faster payments and munities, obstacles in international pay- manufacturer not including NFC tech- mobile technology. ments, the mobile technology revolution nology as a standard smartphone fea- The ‘Payment System Improvement and lack of contemporary features in tradi- ture. The infrastructure for NFC inter- – Public Consultation Paper’ has been tional payment channels. actions is gaining pace globally, with launched by the Fed in order to “to share The Fed is also requesting input on poten- millions of contact payment cards and Federal Reserve perspectives on the key tial strategies and tactics to shape the future terminals being installed. In parallel, gaps and opportunities in the US pay- of the US payment system. Responses to the consumers are becoming increasingly ment system and identify the desired paper are being sought by 13 December, familiar with ‘tap’ interactions as part of outcomes that close these gaps and to be followed by a new policy draft in the their daily routine.” ■ capture these opportunities.” second half of 2014. ■

14 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com F-016 210x280 Ad_Layout 1 03/09/2013 09:21 Page 1

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Last year, PCM delved into the world of virtual currencies, looking at how emerging (and unregulated) methods like bitcoin could impact the payments industry. In less than a year, the pace of activity has been breathtaking.

by Victoria Conroy

t seems that every week virtual cur- mounting interest from central banks and Shavers raised at least 700,000 bitcoin rencies in all their forms are gathering regulators across the world. in BTCST investments, which amounted Imomentum across the world, with more to more than $4.5 million based on the merchants in all sectors starting to accept Regulators start to pay attention average price of bitcoin in 2011 and 2012 them as valid of forms of payment, and in when the investments were offered and some cases, being used to buy real estate In July 2013, a bitcoin exchange based sold. Currently, the value of 700,000 bitcoin and other big-ticket purchases. in Thailand announced that the country’s exceeds $60 million. The appeal of virtual currencies lies in central bank had effectively outlawed bit- Although the focus of the SEC’s investiga- the fact that they can be used anony- coin by declaring it illegal to buy and sell the tion centred on allegedly fraudulent activ- mously, leaving no trace, and carry little virtual currency or use it to make purchases. ity, it highlighted how regulators had been to non-existent transaction fees in some The exchange claimed that it had spent slow to catch up with the world of virtual cases. bitcoin is by far the most widely used several months registering with various Thai currencies. All that changed in August of virtual currency and although market cap government agencies and was initially told 2013, when a US federal judge ruled that estimates vary wildly, it is thought that by the Bank of Thailand that it did not need bitcoin was a valid form of money, paving bitcoin currently has a total market cap of a money exchange licence because bitcoin the way for the legal case against Shavers around $1 billion. is not a currency. to continue. Virtual currency exchanges are springing However, the exchange subsequently Shavers had argued that the case should up all over the world as users scramble to announced that Bank of Thailand officials be ditched because the SEC has no jurisdic- trade the currency online in much the same had concluded that bitcoin would be made tion given that the bitcoin investments he way as physical currencies and commodities illegal, “due to lack of existing applicable was offering were not securities because are traded. And virtual currencies are also laws, capital controls and the fact that the crypto-currency is not money or subject being incorporated into several consumer bitcoin straddles multiple financial facets.” to any regulations. services as companies recognise the tan- In the same month in the US, the Securities However, US Magistrate Judge Amos gible interest in a form of payment that in and Exchange Commission (SEC) charged Mazzant rejected the claim, ruling that “it most cases is anonymous to use and has no a Texas man with running a bitcoin Ponzi is clear that bitcoin can be used as money” discernable transaction fees. scheme that raked in 700,000 bitcoins, worth and “is a currency or form of money, and But there are mounting concerns over bit- $4.5 million at the time, from unwary inves- investors wishing to invest in BTCST pro- coin, given that it essentially operates as an tors. The SEC alleged that Trendon Shavers, vided an investment of money.” autonomous network spanning thousands who is the founder and operator of Bitcoin This ruling could potentially have massive of computers across the world. There is no Savings and Trust (BTCST), promised investors implications, not least because it conflicts central organisation or hierarchy to answer up to 7% weekly interest based on BTCST’s with other US investigations into bitcoin. to. And despite many bitcoin exchanges bitcoin market arbitrage activity, which sup- An example of this is the US Department of being perfectly legal, the currency’s unreg- posedly included selling to individuals who Homeland Security, which has served pay- ulated nature is now attracting rapidly wished to buy bitcoin anonymously. ments start-up with a court order

16 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com cover story

telling it to stop process- as a liaison among businesses, customers (of the invalid EMD I) which is not comply- ing transactions linked and public officials. ing with the current e-money definition of to bitcoin exchange Founding members of the commit- the EMD II and the regulation within the MT. Gox. tee include the CEOs of BitInstant, BitPay, EU. Second, no matter whether the EMD On 14 August Coinsetter, CoinX, Epiphyte, eToro, Hub I (not relevant since 2009) is used or EMD 2013, the New York Culture (Ven), OpenCoin, Payward, QikCoin, II, the core characteristic of e-money has State Department of SnapSwap, Tradehill, Yoyocard and ZipZap. remained the same: issuance on receipt of Financial Services (DFS), Jon Matonis, executive director of the funds (= prepaid). This implies that every which has already sent out subpoenas bitcoin Foundation, said: “Self-regulatory virtual currency which is issued (not traded!) to 22 bitcoin-related firms, confirmed that organisations are excellent non-govern- in exchange for traditional money is legally it is pondering new rules for virtual currencies. mental solutions for industry best prac- defined as e-money (if the other require- The regulator warns that firms engaged tices and the bitcoin Foundation supports ments are fulfilled too). in money transmission are already required inclusive efforts to improve the quality of “Thus, the equation ‘virtual currency = to post collateral to safeguard customer businesses engaged in exchanging Bitcoin.” unregulated’ applies only in special cases money, as well as undergo periodic safety As PCM detailed in its feature on virtual like bitcoin. Otherwise, those currencies and soundness examinations to ensure currencies last year, the European Central defined by the ECB as ‘virtual currencies’, compliance with money laundering laws. Bank (ECB) has already conducted a study which are issued via an inflow of traditional It added that new rules could also be on the implications of virtual currencies. But currency, are subject to e-money regulation introduced specifically aimed at virtual according to Dr. Hugo Godschalk, managing in the EU! Linden Dollars or Liberty Reserve currencies, tailored to their “unique char- director of the PaySys Consultancy, the ECB Dollars (both ‘prepaid’) would be subject acteristics”, and designed to stop the area has failed to fully understand the nature to e-money-regulation if issued within the turning into a “virtual Wild West”. of virtual currencies, which could confuse EU jurisdiction. All of these schemes would future regulatory efforts in this area. have to be redeemable at par. This is a regu- bitcoin groups push for self-regulation latory requirement (Article 11 of EMD II) and “The ECB is not worried at the moment cannot be part of a definition or a criterion The DFS highlights three areas of par- because the volume of virtual currencies for categorisation, as in the ECB report. ticular concern: ensuring payments are is still low. Therefore it does not see them “Third, the report states that e-money processed quickly to build user confidence as a threat to financial stability. But the is (in contrast to virtual currencies) always that money will not “get stuck in a digital issued in units of account of existing legal ECB notes that such virtual currencies black hole”; ensuring virtual currencies do tender currencies. This is also not correct. could have a negative impact on the not become the tool of choice for terrorists, Regulated e-money can be issued in fantasy drug smugglers, illegal weapons dealers, reputation of central banks,” units but the exchange rate vis-à-vis the money launderers, and human traffickers; Dr. Godschalk told PCM. legal tender currencies must be fixed (‘issu- and making sure that the use of bitcoin as ers issue electronic money at par value on an investment is governed properly. the receipt of funds’, ‘issuers redeem, at any Additionally, the US Senate’s committee “Moreover, the ECB points out that the moment and at par value’). on homeland security has stepped up its high degree of anonymity of virtual curren- “The denomination is not essential! The interest in virtual currencies with the launch cies poses a challenge to public authorities ECB is missing the point by stating: ‘lastly, of an inquiry, and has written to Homeland because virtual currencies could be used as the fact that the currency is denominated Security secretary Janet Napolitano asking means of payment for illegal activities and differently (i.e. not euro, US dollar, etc.) for details on her department’s policies and money laundering. means that complete control of the virtual procedures relating to the likes of bitcoin. “Virtual currencies are not regulated per currency is given to its issuer, who governs In the face of this regulatory surge, vir- definition used by the ECB. Therefore elec- the scheme and manages the supply of tual currency firms are joining together tronic money, which is regulated in the EU money at will. to create self-regulatory organisations in since the first E-Money-Directive of 2000, “Central banks are monopolist providers a bid to work with governments and help cannot be a virtual currency. Analysing the of cash. So, they may be forgiven when they shape future rules. The committee for the impact of virtual currency schemes, a prop- do not spend an awful lot of time observ- establishment of the Digital Asset Transfer er definition and categorisation between ing and analysing competitors. But central Authority (Data) says it wants to promote virtual money and e-money, which is com- banks are also regulators and as such they the prudent, responsible development of pliant with EU-regulation, is crucial. should – at least after 10 years of experience emerging payment networks, establish “It is remarkable to see that the ECB is – understand what they are regulating and common rules to protect users, and work using an outdated definition of e-money what the regulations are.” ■ www.paymentscardsandmobile.com payments cards and mobile | September | October 2013 17 EC payments Interchange caps hurt?

Proposed caps on debit and credit interchange across the EU have drawn strong responses from players on all sides of the industry. Has the Commission fully understood what it is proposing?

by Victoria Conroy

n 24 July 2013, the long-awaited pro- posals is skewed heavily in favour of envi- have drawn a strong response from the posal from the European Commission sioned cost savings for merchants which industry, and from groups supporting the Oon regulation of interchange fees was would then be passed on to consumers. In interchange caps. Helen Dickinson, director published, which aims to introduce maximum its proposal, the Commission stated: “There general of the British Retail Consortium, said levels of interchange fees for transactions is anecdotal evidence of price decreases that current interchange fees cost UK mer- based on consumer debit and credit cards, happening in the USA, one year after the chants around £850 million a year, and that along with a ban surcharges. MIF regulation was introduced. In addition, caps would help deliver merchant savings During a transition period of 22 months, from evidence in Australia, it seems that of up to £362 million. caps on interchange fees for debit at 0.2% retailers would benefit integrally from lower “We’re delighted with this landmark and credit cards at 0.3% will apply to cross- interchange fees – as acquiring markets tend border transactions, and thereafter these to be more competitive than issuing markets, proposal. While this is great news, there caps will also apply to domestic transac- whilst the potential increase in cardholder is a real opportunity for the government tions. For cards not subject to the caps, fees is limited to 30-40% of the amount of to go further and faster by making more such as commercial cards and those from the decrease. In addition substantial and immediate cuts through the three-party schemes such as American after interchange fees are capped and trans- the proposed economic regulator for Express, merchants will be able to surcharge parency measures introduced, consumers payments – this means that UK consumers for them or to refuse to accept them. using low-cost means of payment will no could benefit much more quickly.” According to the Commission, the 0.2% longer ‘subsidise’ the (often wealthier) ones and 0.3% caps are based on the so-called using more expensive means of payment as ‘Merchant Indifference Test’ developed in merchants cannot steer consumers, espe- However, payment schemes are defiant economic literature, which identifies the cially for the ‘must use’ cards.” in their response and have highlighted the fee level a merchant would be willing to pay perceived unfairness of the Commission if he were to compare the cost of the cus- Payment schemes remain defiant exempting three-party schemes from the tomer’s use of a payment card with those caps while at the same time claiming to be of non-card (cash) payments (taking into The Commission estimates that the cap putting in place a level playing field. Before account the fee for service paid to acquir- will mean a decline in total annual EU he stepped down as CEO and president of ing banks, i.e. the merchant service charge). interchange fee revenue from €10.5 billion Visa Europe in July, Peter Ayliffe responded The Commission’s rationale for the pro- to €6 billion. As expected, the proposals by saying: “We are concerned that these proposals will be detrimental to the innova- Debit transactions Old interchange costs New interchange costs SAVINGS tion that will support European economic Interlink 0.95% + $0.20 + $0.035 Interlink 0.05% + $0.21 growth. There is little evidence to support $10 Average transaction $330.00 $215.00 $115.00 the claims that these proposals will be ben- $10,000 volume – 1,000 transactions 35% eficial to consumers.” $100 Average transaction Meanwhile, MasterCard Europe president $10,000 volume – 100 transactions $118.00 $26.00 $92.50 78% Javier Perez said that while MasterCard $100 Average transaction $97.35 $7.10 $90.25 “fully supports the Commission’s goal of $10,000 volume – 10 transactions 93% encouraging more secure, efficient, com- Source: Leappayments.com petitive and innovative electronic pay-

18 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com EC payments

ments”, it is also concerned that caps on change fees are largely misunderstood and Average US debit card interchange fee restrictions on the honour-all-cards rule “do the decision to regulate them could have $0.50 not support these goals and will actually major implications. If you look at the exam- $0.45 £0.44 harm and inconvenience consumers and ple of Australia where a similar proposal $0.40 $0.35 small merchants, as well as hinder competi- was carried out, it was initially hoped that $0.30 £0.24 tion and innovation in the European pay- by accepting a reduction in card payments, $0.25 ments landscape.” these savings would be passed on to the $0.20 $0.15 customer – this did not happen and in fact, $0.10 Consumer groups warn of rising prices the loss of revenue caused card issuers to $0.05 $0.00 hike up direct costs to cardholders.” 2010 Proposed The Commission’s proposals also brought However, some are of the opinion that Source: Federal reserve. a strong coordinated rebuke from consumer the proposed cap, while hurting the indus- branded cards. Although the limits will not groups in Latvia, Lithuania and Estonia. The try initially, could help spur momentum in be extended to three-party models from Latvian National Association of Consumer mobile payments and e-commerce. issuers that also act as schemes, such as Protection (LNACP) said: “Currently, the Discover and American Express, these play- Commission has shown neither evidence Could caps drive innovation ers will nonetheless feel a knock-on effect of nor proof that Latvian consumers will bene- elsewhere? the regulations, through greater merchant fit from any arbitrary intervention. As Latvia reluctance to pay these now considerably plans to join the euro zone on January 1, Gilles Ubaghs, senior analyst of financial less competitive interchange rates. 2014, this alone already holds a great risk services technology at consultancy Ovum, that merchants will use the opportunity to states that with payment cards still the “Many payment providers may renew raise prices.” primary method of funding most forms their focus on creating alternative The Fair Banking Association of Lithuania of mobile payments, these changes hold payment revenue streams, particularly said it viewed the proposal as “a hasty mea- major implications for the sector. He also within the mobile payments space. For sure which favours the interests of big mer- warns that the mobile payments business instance, there may be a heightened chants only.” Executive director of the Fair model based on telcos, issuers and other level of interest in better use of Banking Association, Kęstutis Kupšys, said: “It players sharing interchange revenue would transaction data and integration of it could be a perfect decision if it was to bring be under threat. with loyalty and reward-type features down the costs of maintaining and develop- “Given that most existing payment pro- possible with mobile. It remains unclear ing the system, but what the Commission viders have been extremely reluctant, to what shape these innovations might did was just artificially reduce one of the fee’s say the least, to share this revenue stream, components that are supposed to cover the the proposed interchange caps will make take, but the likelihood of payment costs. This leads to the assumption that issue their willingness to share it virtually disap- providers taking a business-as-usual rates for the cards will rise as, now deprived pear. In a little more than two years, defen- approach is increasingly unlikely.” of the interchange fee, banks will be forced sive moves to protect this revenue will be to pass the costs to someone else. I have no extremely strong. Business models for many doubts as to who that someone else will be: potential mobile payment players have Meanwhile Tim Wright, global sourcing it’s us, the consumers.” always been economically questionable, section leader of law firm Pillsbury Winthrop Enn-Toivo Annuk, chairman of the board but they now face even greater pressure.” Shaw Pittman, said: “In some countries such of the Estonian Consumers Union, added: Ubaghs adds that with banks and issuers as Poland and Hungry where the current “The Estonian Consumers Union is con- across Europe continuing to face a chal- level of interchange fees is well above the vinced that pan-European compulsory lenging environment following the global caps, the impact will likely be substantial reduction and unifying of interchange fees financial crisis and subsequent eurozone with a big uptick in merchant acceptance will increase prices for Estonian consumers, challenges, the decline in interchange rev- as compared to current levels. will decrease purchasing power of consum- enue streams will likely provoke a strong “The regulation may signal the end of the ers with the smallest incomes and does not reaction, particularly among larger players Commission’s decades-long antitrust battle support the development of electronic pay- with high numbers of cards in issue. against MasterCard and Visa Europe. But the ments in Estonia.” “With a cap of 0.2% for debit transactions plan has a good way to go before it becomes Phil Davies, managing director of UK pay- and 0.3% for credit transactions, the EC’s law: it will be discussed and likely modified ment service provider PSI-Pay, added his proposals involve a sizeable decline from by EU member states and the European voice to those criticising the Commission’s existing rates, which frequently run at ten Parliament in a process which could take proposals, saying: “Merchant and inter- times that level, particularly for premium- several years. The debate is far from over.” ■ www.paymentscardsandmobile.com payments cards and mobile | September | October 2013 19 non-cash payments World Payments Report

The annual World Payments Report from RBS and Capgemini is a major benchmark for the payments industry in tracking and analysing trends in non-cash payments worldwide.

by Victoria Conroy

he latest edition of the RBS/Capgemini transaction volumes with a 76.9% share. ments, ahead of e- and m-payments. Debit World Payments Report makes for Forecasts show, however, that for all the card use grew by 15.8% (to 124 billion trans- Tvery encouraging reading for the growth in the surging economies of Asia and actions) globally during 2011 and credit cards payment industry. All forms of non-cash Latin America, it will still take at least 10 years grew by 12.3% (to 57 billion transactions). payments, such as debit cards, credit cards, for emerging markets to overtake mature According to Connors, the econom- e-commerce and mobile payments are markets in transaction volumes. ic recovery taking place in many regions growing strongly globally and total global Speaking to PCM, Teresa Connors, around the world has led to renewed confi- non-cash payments volumes are expected head of client engagement for TS market dence and usage of credit cards in particular, to top 333 billion transactions in 2012 after engagement and international banking something that the industry will cheer. transactions grew by 8.8% in 2011. at RBS, said that besides greater levels of “There is a correlation in the uptake in The key findings of the report include the financial inclusion in emerging markets using credit cards particularly in mature rapid ascendency of non-cash payments and the development of payment infra- economies that are slowly emerging from in emerging markets. Central Europe, the structure, other factors are at play. recession, globally credit card usage rose by Middle East, Africa (CEMEA) and Emerging “In some markets, it’s as a result of govern- 12.3%. Debit card usage continues to grow Asia are leading the charge with growth ment intervention and where there is a com- with an uplift of 15.8% globally.” in transaction volumes of more than 20%, parable lack of what we would call traditional Jean Lassignardie, corporate vice-pres- while Latin America recorded growth of banking infrastructure in some countries, ident, chief sales and marketing officer of 14.4%. Growth in these emerging economies such as the African nations for example. Some Capgemini Global Financial Services & Asia outpaced that of the developed markets markets have leapfrogged the last 30 years Pacific, added: “It reinforces what we said of North America, Europe and Mature Asia, of infrastructure and gone straight to mobile the year before last, which is that this indus- which recorded single-digit growth rates, payments.” try is really embedded into the daily life of though mature markets still account for Debit and credit cards continue to be the people on an individual and professional more than two-thirds of global non-cash most popular non-cash payment instru- level. It’s not a surprise that we see extreme correlation between where credit increases Number of global non-cash payment transactions, billions (2008–2012e) as consumer confidence returns. We can see

100% direct and immediate impact there.”

90%

80% 113 117 124 130 A statistical ‘black hole’? 111 North America (US and Canada) 70% Europe (including eurozone) 60% Mature Asia Pacific Industry estimates suggest online and Latin America 50% 85 mobile payments will grow at 18.1% and 82 75 79 CEMEA 40% 73 58.5% respectively through 2014. This raises Emerging Asia 33 30% 30 the question of how banks can best compete 26 27 22 34 20% 29 against non-bank players, particularly in the 24 26 19 27 10% 17 21 11 14 field of mobile payments. 17 20 25 0% 12 14 Lassignardie told PCM: “It’s a combina- 2008 2009 2010 2011 2012e tion of their strengths. Where customers Source: 2013 World Payments Report. of the bank are looking for more customer-

20 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com non-cash payments

centric services, banks can leverage their some instances there is a 50% gap between tion, payment service providers can offer data. The larger retail banks are very estimates. We think that’s because of a lack both retail and corporate customers’ choic- well equipped to do that. There is a real of common definitions and standards, and es between instruments, locations, chan- intimacy between a bank and its clients. it’s things like that which will help or hinder nels and currencies which is increasingly On the other hand, the technology com- growth in all markets but particularly in being demanded. panies have the ability to stimulate that emerging markets where mobile payments Innovation is evolving in consumer-to- and attack the bank by providing very are routinely used. This gap can be closed business (C2B) acquisition towards ‘any interesting added value services.” with consistently defined data and statisti- form,’ ‘anywhere,’ and ‘anytime’ payments E-payments are expected to reach a total cal collection.” which can be found in alternative models of 34.8 billion transactions by 2014, along- Improved statistical data collection from PayPal (Order Ahead application with side 28.9 billion mobile payment transac- would help payment services providers Jamba Juice) and WorldPay (accepting mul- tions in the same year. But Connors says make more informed investment decisions tiple instruments.) In business-to-business that there is much more value potential in as well as help combat future market risk. (B2B) acquisition, innovation is seen in e-payments waiting to be unlocked, par- Another ‘black hole’ is emerging in the the SWIFT (3S Key security solution) and ticularly in relation to e-commerce. area of virtual currencies, which are start- ErsteConfirming (supply chain solution.) ing to gain traction worldwide. According “Both new and legacy payments provid- “In the e–payments space, volumes are to Lassignardie “Jean: Virtual currencies are ers recognise that not all players need to really starting to grow. This year, we’ve something of a black hole. They are very provide end-to-end services and are focus- done a lot more forecasting than in difficult to define and quantify. They are ing on the four ‘Innovation Value Hotspots’ previous reports. Back in 2010, there were in their infancy in relation to the scale and of origination, acceptance and capture, size of the market. But they do provide an security and fraud, and value-added ser- 17.9 billion e-commerce transactions and answer to the appetite of customers in cer- vices,” said Lassignardie. we now predict that there will be 34.8 tain circumstances. It’s too early to predict “In choosing one or more of these billion in 2014. E-commerce is very much where virtual currencies will go, but they hotspots, payments providers have an sustained and fuelled by online activity cannot be ignored.” opportunity to differentiate and meet the and online retailers. But the drop-out new and changing needs of both retail and rate amongst online buyers is 60%. If that Innovation in payment acquisition business customers.” number could be improved, the volume Elswhere, the report urges that banks and Innovation continues to be a key theme other financial service institutions pay close of payments would be staggering.” of the report, with payments acquisi- attention to regulatory initiatives. tion emerging as the area with greatest The report concludes that the trajec- potential for customer-centric innovation. tory of change in the payments acquisition However, despite such strong growth Drivers for innovation in payment acquisi- space is too steep for payment service rates for e-payments and m-payments, the tion for payment service providers include: providers to stand still. World Payments Report 2013 raises some desire for proximity to customers, need to Strategies must be revisited and reformed important questions about the veracity of meet new and changing demands, and the in order for payment service providers to these estimates. fragmentation of the value chain. stay in the game and to benefit from the According to the report, assessing non- Through payments acquisition innova- changes innovation will deliver. ■ cash instruments such as e- and m-pay- ments, prepaid cards and virtual currency Number of global m-payments transactions, billions (2010–2014f) (offered by banks and non-banks) and

growing transaction volumes in regions 40 such as Africa, has unveiled a significant 2013 Industry estimates 2010–2014F CAGR statistical ‘black hole’ due to inconsistent 30 28.9 reporting of payments. This inconsistency 3.8 Total 58.8% Non-bank providers 92.3% is emerging as new regions become more 20 17.8 2.1 Bank providers 55.4% active and non-banks take an increasing 11.1 1.1 25.2 share of the market via instruments such as 10 7.0 0.6 15.7 4.6 e- and m- payments. 0.3 12 12 12 Connors said: “We have found some gaps 0 2010 2011 2012 2013F 2014F in the estimated size of the mobile market Source: Capgemini Analysis, 2013. Note: numbers and percentages may not add up due to rounding. and the predicted size of the market. In www.paymentscardsandmobile.com payments cards and mobile | September | October 2013 21 issuing and acquiring IN ASSOCIATION WITH

First Data signs merchant OP-Pohjola selects Equens as card services deal with Talmer Bank and Trust processing partner

Global payment processor First Data has signed a long-term strategic merchant uropean payment processor Equens “In card payments, Finland is a super- services partnership with Talmer Bank has been selected by Finland’s power where cards have established their and Trust, a community bank of the US. OP-Pohjola Group as its new card position as an easy and safe means of pay- E ment. Co-operation with Equens is part of Under terms of the agreement, First processing partner under a long-term Data will partner with Talmer Bank and contract for card services. The first card our plan to develop and improve the effi- Trust to distribute payment processing transactions will be processed in the fourth ciency of our card services further as well as services to the bank’s clients through- quarter of 2014. to improve our capability to respond to our out their client-facing channels, includ- The two entities already had an agree- customers’ changing needs,” said Kasimir ing its 42 retail branches. First Data will ment for the processing of SEPA payments Hirn, director of the cards and payments manage operations, risk management as well as their regular cross-border euro business at OP-Pohjola. and merchant sales activities. ■ payments since 2008. With this new agree- According to Equens, the new agreement ment OP-Pohjola Group will also entrust will enable the company to establish a solid their debit and card process- position in the Scandinavian cards market Russian banks increase ing to Equens. and strengthen its position in Europe. ■ analytics usage

FICO, a global predictive analytics and Prepaid cards can help families hit by Universal Credit decision management software com- Thousands of unbanked households risk benefits payments. The aim is to study how pany, and the National Bureau of Credit being made homeless unless they are unbanked individuals – of which there are Histories (NBKI), a Russian credit bureau, allowed to choose how they receive their more than 1.5 million in the UK – could have announced that Russian banks benefits under Universal Credit, the social budget better and pay their rent through have dramatically increased their use of benefit disbursement scheme recently prepaid cards. credit scores and credit bureau data in introduced in the UK, according to Prepaid According to Noel Moran, CEO of PFS, risk management. Financial Services (PFS), a UK prepaid pay- “What has been overlooked are the poten- Six of the top 10 Russian lenders, and ment provider to local authorities. tial benefits of prepaid cards to these 15 of the top 30, now use FICO Scores PFS is calling on the UK government to households if they are allowed to choose based on NBKI data. give individual local authorities the free- their own restrictions, in order to improve “Russian banks and microfinance insti- dom to choose how they pay out benefits. how they budget and manage their benefit tutions are demonstrating a responsible It is also asking it to broaden its planned payments. We need to have a mature, fac- approach to risk management,” said NBKI pilot projects on Universal Credit in Wigan, tual debate about how prepaid technology CEO Alexander Vikulin. “During the first Warrington and Oldham next month to can help vulnerable groups in the move to half of 2013, credit grantors ordered 41% include a prepaid card programme for Universal Credit.” ■ more credit reports than in the same period last year, and twice as many as in the first half of 2011.” ”Russian banks are adopting more Citi expands commercial card platform into Turkey advanced risk management systems,” Citi has expanded its global commercial globally consistent customer experience, said Evgeni Shtemanetyan, who directs cards footprint by adding Turkey to its pro- unsurpassed global acceptance and digital FICO’s operations in Russia. “We are see- prietary platform, further strengthening its tools that enable greater visibility of their ing increased interest across the banking offering throughout Europe, Middle-East corporate spend, according to Citi. Later market for consulting services and soft- and Africa (EMEA). this year, Citi intends to formally launch the ware solutions for application process- Citi has offered commercial cards in platform in Russia, where certain clients are ing, debt collection, customer manage- Turkey for some time, but migration onto currently on a pilot programme. Launches ment and fraud protection.” ■ Citi’s global platform enables both multi- are also planned in Ukraine and Kazakhstan national and local clients to benefit from a before the end of the year. ■

22 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com IN ASSOCIATION WITH

Redefining card acquiring with Datacard instant issuance helps “Rich Merchant services” flooding victims in Canada Multi-screen world, constant connectivity and contextual relevance are changing both atacard Group has announced that who qualified were able to receive $1,250 the offline and online shopping experience. their financial instant issuance solu- per adult and $500 per child. New “digitally connected” consumers Dtions were used to help issue pre- Datacard sent an expert member of its expect a more integrated experience paid cards to those affected by the recent financial instant issuance team to Calgary that is quick and consistent. Changing massive flooding in Canada. to help with service and support of issuing consumer behaviour demands a change in Severe flooding had forced thousands of the cards; along with Datacard CardWizard commerce. Retailers are rethinking their residents to evacuate their homes through- issuance software securely loaded and con- digital strategies to create personalised out southern Alberta, which led to the figured onto laptops; and Datacard CD820™ and engaging shopping experiences with Alberta government setting up a flood instant issuance systems that facilitated the a simple checkout and efficient payment assistance programme that included issuing printing, card personalisation and issuance process. Retailers realise that they cannot prepaid cards to affected Albertans. Those of prepaid cards. ■ monetise well if they don’t deliver the right interaction and user experience. How are these new challenges merchants First Data and Raiffeisen Polbank extend processing agreement face disruptive also for payment providers and how are both, merchants and payment First Data has been chosen by Raiffeisen which links the bank’s channels with First providers, challenged to stay relevant Polbank as a key supplier of outsourcing Data’s systems in order to provide custom- and competitive? All these challenges services including issuing and servicing ers with basic information related to the on the merchant side require a different debit, credit and charge cards along with use of payment cards, such as their card mindset of payment providers, due to the processing and settling the payments. balance, and a transaction monitoring ser- transformation of traditional transaction First Data also provides Raiffeisen Bank vice based on PRM system (Proactive Risk centric to customer centric card acquiring Poland with a suite of value-added services, Manager) that generates alerts in instances and services. A need to define a new range such as WDX (Web Data Access eXchange), of suspected fraudulent transactions. ■ of merchant services connecting payments, commerce and loyalty has emerged. In response to this, the new concept of “Rich hails success of online account merchant services” (RMS) was identified by the Empiria Group and presented Paysafecard Group has announced that manage their paysafecard PINs via an online at the MPE 2013, the biggest European five months after the launch of its “my account. Instead of having to enter individual payment acceptance event, staged in paysafecard”online account across Europe, PINs for each payment, the online account Berlin. RMS represents a new generation 150,000 of its customers are already using enables customers to pay with their unique of merchant services reflecting interaction the new service. user name and password. Personal data or between commerce and payments. RMS is my paysafecard, which has been intro- credit card details are not required to make a currently being built around digital retail duced in several European countries earlier payment. my paysafecard is not linked to any technologies and solutions, like mPOS, digital this year, allows paysafecard customers to bank account. ■ wallets, coupons, QR codes and others. Understanding the need to explore new challenges and further educate the industry, JCB extends international issuing capabilities the team of Empiria has started to prepare and distribute series of briefing materials, JCB International (JCBI) and Caixa Economica JCB is a global payment brand with over particularly “Rich Merchant Services“, Federal (CAIXA), the largest public sector bank 24 million merchants and 80 million card “Interaction Beyond Payments” and “mPOS in Latin America, have signed an agreement members around the world. In Brazil, with a Brief”. As part of 7th annual MPE 2014 for the issuing of JCB cards in Brazil starting partnership with Cielo, Brazil’s largest credit preparations, 2nd editions of mentioned in April 2014. Starting with credit cards for a card acquirer, JCB card is now accepted at all briefs will be released during Q4 2013 and Q1 total of 5 million accounts in the next 3 years, of the more than 1.2 million Cielo merchants, 2014. All published materials are available for CAIXA plans to add debit and prepaid JCB representing almost every credit card accept- free to download upon request at: brand cards in the near future. ing merchant in Brazil. ■ www.merchantpaymentsecosystem.com. www.paymentscardsandmobile.com 23 risk & compliance The changing face of UK regulation and the forthcoming FCA Thematic Review

Paul Asare-Archer is head of compliance at Telefonica Financial Services UK, and money laun- dering reporting officer at Telefonica UK. Paul Asare-Archer has an MBA and a law degree and 13 years’ experience in compliance and regulation.

aving superseded the Financial • Consumer awareness and understand- “The technol- Services Authority on 1st April 2013, ing – the potential risk that while ser- ogy that is now con- Hthe Financial Conduct Authority has vices are new and consumers are less tained in a smart- stuck true to its bold vision to be far more familiar with using them, it is more likely phone is greater proactive than its predecessor. that payments will be made in error, than most comput- Paul Asare-Archer Not only have there been a number such as paying the wrong person or pay- ers had only a few years ago. The retail of high profile fines across financial ser- ing an incorrect amount. banking sector has embraced this technol- vices, but following quick on the heels ogy and innovated, delivering new ways for • Anti-money laundering systems and of the recent Mobile Phone Insurance their customers to transact,” comments Clive controls – the potential risk that mobile Thematic Review, the FCA has now Adamson – FCA Director of Supervision. banking is used for the facilitation of launched a Thematic Review into Mobile money laundering activities, particu- “This has been a strong driver in shift- Banking and Payments. The FCA at the larly where a mobile payment service ing consumer behaviour and many now same time also launched their interim is not linked to the customer’s current expect access to at least basic banking ser- report into Mobile Banking. account and there aren’t additional vices through their smartphones. Research In publishing their interim report, the checks to verify the identity of the published earlier this year showed that one FCA is seeking to help consumers under- payee and recipient. in five adults in the UK has already made a stand some of the potential risks of mobile payment using their phone; over a quarter banking and set out to firms an early view So what does this mean for the of us use our mobiles to check bank bal- of what it will be reviewing. payments industry ances, and more than half of us would pay with our phone if it was an option in the Mobile Banking – The FCA has now engaged a number local supermarket,” continues Adamson. The Potential Risks of firms of ranging sizes to be used as a sample of the industry. Each participating “As mobile banking continues to devel- The potential risks in mobile banking as firm will be asked to submit documenta- op and grow in popularity, we have seen identified by the FCA within their Interim tion with onsite visits to follow. According greater choice for consumers, as different Report are: to the FCA their findings will be published types of firms launch a variety of mobile in a formal report in the first half of 2014. banking products. We recognised in the • Fraud – the potential risk that fraudulent 2012/13 Risk Outlook and 2013/14 Business It is difficult to pre-empt the findings, access to mobile banking accounts could Plan that mobile banking has the potential but it is of course not beyond the realms of result in customers being unable to to rapidly increase in popularity. Having possibility to suggest changes to the mobile access their money or make payments, identified this, we wanted to carry out payments industry will be recommended. resulting in financial loss, inconvenience thematic work to understand the potential Mobile payments continues to move at a and stress. risks, as well as the measures being taken pace, and whilst the FCA is keen to not hin- • Security – the potential risk of consumers by firms to address them. der innovation, they appear equally keen to receiving malware or a virus when down- ensure that the industry evolves in line with We approach this review with clear loading a mobile banking application. the FCA statutory objectives of protecting outcomes in mind. We want to support • Technology risk/ interruption to ser- consumers, protecting and enhancing the innovation that provides consumers with vice – the potential risk of a systems integrity of the UK financial system, and products that meet their needs and expec- failure or an IT problem preventing con- promoting effective competition in the tations while also ensuring their interests sumers from accessing their accounts. interests of consumers. are protected,” Adamson concludes. ■

24 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com Risk, Regulation & Innovation in MOBILE PAYMENTS Identifying growth opportunities in mobile financial services through multi-stakeholder analysis of policy, regulatory control & drivers

DATE: LOCATION: 5th November 2013 Central London

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What will the most innovative and FEATURED SPEAKERS successful business models in EXPERT SPEAKERS INCLUDING: mobile payments have in common?

Dr Thaer Sabri, They’ll embrace risk management and Stewart Room, Chief Executive, Partner, Field Fisher Electronic Money compliance as an opportunity... Waterhouse LLP Association

With convergence of different ecosystems at the heart of digital commerce

the regulatory and policy framework is rapidly evolving. It’s a regulatory John Burns, minefield for the mobile money industry. Neira Jones, Senior Manager, Partner, Accourt Ltd; Compliance Advisory, Chairman, Cybercrime Transaction Banking, It’s also a critical opportunity to identify and stimulate innovation and Advisory Board, CSCSS Lloyds Banking Group growth. Understanding the current rules, the drivers for these, and what might be next on the horizon is crucial for strategic board level decisions as Paul Simmonds, Robert Courtneidge, well as technical progress. CEO, Chairman, Prepaid The Global Identity International Forum; A successful strategy will go beyond mere compliance and will seek higher Foundation; Co-founder Global Head of Cards & Board member, and Payments, understanding of how the rules are shaping an enhanced end-user experience Jericho Forum Locke Lord LLP and building trust in the move toward the mobile becoming their account. Bringing together leading figures from across the industry this one day seminar lifts the lid on the beneficial relationship between risk management, regulation and innovation in mobile payments. Gary Munro, Richard Braham, Senior Consultant, Head of Payments, Consult Hyperion British Retail Consortium

Very interesting agenda and excellent speakers. “ I’m looking forward to a thought provoking day. ” Jean-Stéphane Jane Adams, Head of Marketing, Consult Hyperion Gourévitch, Peter Sidenius, Director, Director, Mobile Convergence Edgar Dunn & Company Ecosystems LEAD PARTNERS MEDIA SPONSOR ENDORSED BY Charmaine Oak, Director, Michael Rolph, Digital Money Chief Creative & Practice Lead, Commercial Officer, Shift Thought Yoyo

Contact us on +44 (0) 20 3397 7434 or [email protected] ORGANISED BY MORE INFORMATION AND REGISTRATION 4 www.mobilepayments-rri.com mobile payments

FNB taps instant Biometrics can revolutionise messaging for mobile money transfers m-payment security

Pan-African banking group First National Bank (FNB) has registered a ith the explosion in smartphone MOBIO (Mobile Biometry) project is note- patent in South Africa for using instant usage, the number of payments worthy, with the aim to develop advanced messaging within a smartphone app to Wdone via mobile devices has sig- biometric tech solutions for authentication transfer money. Once users have reg- nificantly increased over recent years. As on personal mobile devices. Leveraging the istered for the service, they can send e-commerce becomes m-commerce, the existing technologies embedded within money between FNB e-wallet accounts industry has to focus on payment security, these devices (e.g. headphone, microphone to contacts as instant messages. according to research firm Frost & Sullivan. and camera), the optimal solutions included According to the bank, although “During a ‘card not present’ process, a voice and facial recognition, and bi-modal instant messaging and mobile bank- personal account number (PAN), expiration authentication. ing on their own aren’t patentable, the date, and card validation code (CVC) are not “The time is now right for biometric tech- combination of the two is what makes enough to completely secure a transaction. nology to emerge as a secure solution for the technology unique and patentable. Biometrics that provide high levels of secu- mobile applications that require high levels Funds are sent from and received to an rity and an intuitive customer experience of security, particularly payment,” added FNB e-wallet, a service which is open might be the solution for secure mobile Georges. “From a pure-payment security to non-FNB customers and linked to payments,” it states. point of view, biometrics has already deliv- a user’s mobile phone number. Users “Protecting the mobile device itself is a ered significant advantages. that aren’t FNB customers can only first step, necessary to secure mobile pay- “One potential mobile development load money into their e-wallet at an ments. Although a personal identification could have a huge impact on biometric FNB ATM that supports automated number (PIN) can do the job, in 2011 more security solutions; rumours persist that the deposits after registering at an FNB than 60% of smartphone users were not next iPhone will include a fingerprint sensor. EasyPlan branch. ■ using a PIN to protect their mobile access,” Given that Apple acquired Authentec – with said Frost & Sullivan global programme its TouchChip product family – in 2012, this director of ICT in financial services, Jean- is a strong possibility,” said Georges. “We ValidSoft warns of phone Noel Georges. expect to see biometrics becoming increas- phishing scams According to Georges, over the past ingly prevalent over the course of the next decade many biometric projects have 3-4 years, driven by a desire among vendors Wall Street regulator FINRA has warned emerged with the aim of enabling user iden- and consumers alike to be better protected investors and consumers about an tification on mobile devices. In Europe, the when accessing mobile services.” ■ uptick in phone-based phishing scams, involving fraudsters cold-calling people claiming to represent at least one well- EC allows Telefonica digital payments service known brokerage firm in order to dupe people into handing over personal or The European Commission has given mobile or other internet connection financial account data. proposals by CaixaBank, Santander and in order to access their wallet and the According to Pat Carroll, CEO of Telefonica to set up a joint venture to offer Commission concluded Telefonica would ValidSoft, this remains a prevalent secu- digital financial services the green light. not have the ability to block the access of rity issue for consumers and financial After looking into the concerns over other providers on its networks, there- institutions alike. competitiveness the Commission stated fore no competition laws are in danger of “The first part is mutual authentica- there are already several providers of being broken. tion, whereby the bank has to prop- similar services in Spain, with more still to Officials also assessed the impact of the erly authenticate itself to the customer. emerge, therefore the trio may join up to transaction arising from the relationship Banks not only need to highlight the devise their own. between the market for providing digi- types of scams in existence but also Included in the services is a mobile wal- tal wallet services, including peer-to-peer explain to consumers how security tech- let to allow enterprises and consumers the payment functionality, and the market for nology could work for them.” ■ ability to pay using a handheld device. issuing payment card services, where Caixa Users will need to connect through a Bank and Santander are active. ■

26 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com mobile payments Consumers want banks to lead way in mobile

uropean smartphone shoppers This confidence is even stronger among experiences, shopping and social features, would be more confident engaging Spanish consumers at 68% while 50% of and value-added services. Ein mobile commerce if they could do smartphone owners in Germany feel the This, the study states, represents a new so using services provided by their bank, same way. opportunity for retail banks to drive cus- according to research published by the The report found that more than 50% of tomer loyalty, attract new business, and Future Foundation and commissioned by UK respondents are already buying goods generate more revenue. Among the key mobile Monitise. on their smartphones. Leading factors likely findings of the report are that tablets have The research reveals six in 10 UK smart- to prompt UK consumers to buy products emerged as a unique and valued user phone users (57%) would feel more confi- and services via a bank app include ease- interface with 41% of survey respondents dent buying goods and services by mobile if of-use at 60%, incentives such as loyalty wanting to use tablets compared with they could use apps provided by their bank. schemes at 49%, direct insights from their smartphones, and 60% of tablet owners bank on the state of their preferring a tablet for mobile banking. “I would feel more confident in buying goods and services finances and budgets at Consumers are now using both devices through a mobile phone if I could do so through an app 46% and convenience at for different purposes and want features offered by my bank” 37%. optimised to suit each device’s form factor.

Agree strongly Agree Meanwhile, separate Significantly, the report finds that con- 100% research from Monitise sumers are seeking services that drive and Cognizant into US security, ease mobile payment use and 80% consumer expectations provide insights on spending and bill pay-

60% around m-banking and ment patterns, and they’re willing to invest payments, has found that in these products. 40% consumers are increasing- More than one-third of consumers sur-

20% ly expecting their banks to veyed are willing to pay for advanced help improve their mobile security features such as biometrics and 0% Spain UK Germany lifestyles by providing nearly 30% of respondents indicated a anytime, anywhere capa- willingness to pay for mobile payment Source: Monitise, Future Foundation. bilities, customised user capabilities. ■

PayPal launch Beacon is transferred securely. No wallet. No card. The online payment company said in Nothing to do. Not even touching your a statement that it will be opening up its PayPal announced PayPal Beacon, a low- phone.” mobile in-store API soon for 100 develop- powered Bluetooth device that will allow Paypal say that by leveraging Bluetooth ers to imagine ways to make the shopping consumers to automatically check-in at Low Energy (BLE), transactions can take place experience better, from being able to self- local stores. without having to open up an app, without checkout on a mobile The company describes it as a “complete GPS being turned on, and even without a phone to automatically hands free experience” that will “reinvent phone signal. placing a customer’s today’s in-store shopping experience.” Consumers will also have full control of usual order as soon as “PayPal Beacon opens the door to a funda- stores they will want to check in to, those they walk through the mentally different way to use technology to they will want to get prompted to confirm door. make shopping more valuable and more per- payment for, and stores they will want to PayPal expects PayPal sonal for consumers and retailers,” explains enable a complete hands-free experience for. Beacon to become David Marcus, president of PayPal. “PayPal Beacon won’t constantly track broadly available from “We challenged ourselves to find a better a user’s location,” Marcus continues. “If a early 2014 and the US, experience than swiping a credit card. We consumer enters a store and declines to UK, Australia, Canada, figured the only better way to pay would check in, or just ignores the prompt entirely, Hong Kong, and Japan be to do nothing. Just walk in a store, and, no information is transmitted to PayPal or will be the first locations like magic, when you’re ready to pay, money the merchant.” to get the dongle. ■ www.paymentscardsandmobile.com payments cards and mobile | September | October 2013 27 contactless

Wind and BNL to test NFC Visa showcases Slovakia as a payments in Italy contactless leader Italian telecom group Wind and BNL BNP Paribas Group, in collabora- tion with SIA and MasterCard, have isa Europe has highlighted Slovakia as transactions. The value of transactions con- announced the start of a trial of NFC a showcase market for the adoption ducted by the bank’s 630,000 cardholders technology, which allows users to Vof contactless technology, with 1.43 has risen from €3.3 million in 2011, to €16.5 make purchases in contactless mode million cards in circulation recording one million in 2012. via Samsung smartphones, with a clas- million contactless transactions per month. Tatra recently joined forces with telecom sic credit card issued by BNL on the Almost 7% of Visa transactions in Slovakia firm 02 for a full-scale commercial launch of MasterCard platform and virtualised are contactless, with an average spend of mobile contactless payments. Customers on a NFC SIM provided by Gemalto. €9 per card. of the bank who have an NFC-enabled To utilise the service, users select Tatra Banka, the first of the local banks smartphone can go into a local O2 branch the method of payment on the to introduce contactless payments in 2010, and have their SIM card replaced with a con- ‘YouPass BNL’ smartphone app and has recorded explosive growth in the use tactless SIM to make payments at around place the smartphone close to a con- of the technology over the past year, where 12,000 contactless terminals in retailers tactless POS terminal. it has gained a 44% share of the bank’s card across Slovakia. ■ The trial will use the SIA infrastruc- ture, which has created a hub interop- erable between banks and telcos for Octopus to offer mobile NFC contactless payment via smartphone Making purchases with a smartphone is munication (NFC) technology to allow and other NFC services. ■ gaining a foothold in Hong Kong, and it holders of credit cards to pay for transac- has changed the habits of Sunny Cheung tions with smartphones linked with the Yiu-tong, a die-hard fan of smart cards. card accounts. Republic of Kosovo rolls Octopus Cards, which runs the city’s The Hong Kong Monetary Authority has out contactless ID card earliest and dominant contactless smart said it aims to facilitate the development card system, says competition from of NFC mobile payment services in Hong The Republic of Kosovo has chosen banks in payment technology is intense Kong, following the USA, Britain, France, European payment technology special- but it fights to maintain its pioneering Japan and South Korea, which are planning ist Giesecke & Devrient (G&D) to manu- advantage by providing a variety of or launching such services. facture and deliver its multifunctional ways to pay, such as Octopus watches “When I don’t want to carry a bag or contactless smart ID cards. As prime instead of cards, and now by flashing a wallet with me, I usually pay using the contractor, the Munich-based technol- the mobile. mobile phone,” Cheung, who has more ogy company is assuming responsibility HSBC and Hang Seng Bank have than 10 Octopus cards, told the South for all aspects of project management launched services using near-field com- China Morning Post. ■ as well as for system development and manufacture of the cards. Sub-contractor for the Automated e-Revenue Gateway partners with ElectraCard for contactless Fingerprint Inspection System ElectraCard Services (ECS), an Indian pro- sumers a choice of debit or prepaid cards (AFIS) and for the smartcard person- vider of software and processing solutions with the first NFC capabilities in Nigeria. alisation machinery is Berlin-based for electronic payment systems, is pow- The launch of this card by e-RG enables all Bundesdruckerei. ering e-Revenue Gateway (e-RG), a pay- card users to pay their bills in a safe, secure G&D is also in charge of implement- ment processing and electronic transaction and seamless environment along with the ing and structuring all system compo- switching company, to launch contactless use of the card for personal requirements. nents necessary to support every step electronic payments in Nigeria. The electra iTx suite of products will assist in the ID documentation process, from ECS’ PA-DSS compliant platform will help e-RG in its plans to increase the card base to applying for a card to delivering it. The e-RG to launch programmes with multiple 50 million users in the next five years, in line new ID cards will be issued to Kosovo financial institutions and channels including with the Central Bank of Nigeria’s “Cashless citizens by the end of 2013. ■ ATM, POS, internet and mobile on the same Policy”, aimed at promoting electronic pay- platform. The eRG payment cards offer con- ments in the country. ■

28 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com contactless

First NFC-enabled iPhone prepaid Isis moves beyond NFC mobile wallet launches in Europe with AmEx Serve tie-up US mobile wallet initiative Isis has moved to extend its upcoming mobile alixa Group, DeviceFidelity and not accept contactless payments. wallet beyond NFC payments by part- MasterCard have announced the UK “The UK is one of the fastest growing pre- nering with American Express to inte- Klaunch of the moneto prepaid wal- paid markets in the world and is a leader in grate the card network’s Serve platform let. The wallet enables NFC functionality terms of NFC and contactless acceptance at onto the wallet. In 2012 AmEx agreed on an iPhone, allowing users to tap and the point of sale. By enabling iPhone users to add several of its cards, including pay for goods at thousands of MasterCard to make smart, simple and secure NFC trans- Serve, to the Isis wallet, enabling users retail outlets across the country. The ser- actions we are taking an enormous step to make mobile NFC payments from vice will soon be compatible with Android towards making mobile money an everyday their accounts. mobile phones, and is set to be rolled out reality for consumers,” said Ed Chandler, The new deal means that when Isis across other European countries in the CEO of Kalixa Group. ■ launches across the US later this year, all coming months. customers will be offered an integrated moneto integrates NFC technology AmEx Serve account, enabling them to into a consumer’s mobile phone using also pay bills online and make person to DeviceFidelity-patented microSD NFC tech- person payments. nology and combines it with an app to offer Michael Abbott, CEO of Isis, said: “By the control and flexibility of prepaid in a adding American Express Serve to the secure and mobile environment. Users can Isis Wallet, we can immediately provide access account information on the move, millions of consumers the opportunity check their balance in real-time, locate mer- to participate in mobile commerce as chants and ATMs and, unique to moneto, we continue to enrich the consumer make wallet-to-wallet transactions. experience.” ■ The wallet works irrespective of the user’s mobile operator. The companion EMV prepaid MasterCard allows users to SingTel and Visa team on withdraw cash at ATMs, make online pur- mobile NFC payments chases and shop at retail outlets that do Singapore telco SingTel and Visa have announced a strategic alliance that will RBC launches cloud-based NFC m-payment service enable consumers in Singapore and Australia to pay for goods and services Canadian banking giant RBC has launched point of sale through partnerships with using their smartphones at all Visa pay- its RBC Secure Cloud mobile payments mobile service providers. While the solution Wave acceptance points worldwide. service. This new technology, a first in thoroughly protects client financial data by Visa is working with SingTel to link Canada, will allow clients to more safely leaving it at its source, clients are also pro- Visa prepaid accounts to mCash, and securely pay for purchases using their tected by the existing Zero Liability Policy SingTel’s mobile money solution. mobile devices. RBC will bring RBC Secure for , Visa and MasterCard. Planned for launch in early 2014, the ser- Cloud to market by the end of the year with Initially focused on NFC, the RBC solution vice allows customers to wave and pay debit and credit on a number of smart- is flexible and can support new technolo- with their NFC-enabled smartphones for phone platforms. gies such as bar or QR codes, or other stan- low-value purchases at Visa payWave With RBC Secure Cloud, the financial dards, and allows offline transactions. Other acceptance points. There are currently institution assumes the security burden, benefits for the client include simpler and 12,000 Visa payWave acceptance points since sensitive client data remains with faster provisioning of account information, in Singapore and over 100,000 across the bank, as opposed to keeping it on the card lifecycle management including card Australia. Payments will not be lim- phone, as is the case with other models. The replacement for lost, stolen and expired ited to Singapore and Australia, and will data is transmitted encrypted and decoded cards as well as setting preferences an open extend beyond NFC transactions. ■ locally on the client’s mobile device at the wallet architecture. ■ www.paymentscardsandmobile.com payments cards and mobile | September | October 2013 29 pos terminals

Groupon moves into B+S Card Service launches payment terminals to UK POS terminal market merchants B+S Card Service has announced the oupon specialist Groupon has linked launch of its PCI PTS 3.0-compliant up with POS terminal manufacturers VX820 DUET and VX680 payment ter- CIngenico and VeriFone to integrate minals to the UK market. The VX820 is a its Breadcrumb service with the companies’ contactless-enabled countertop termi- respective terminals. The move follows nal whilst the VX680 is its contactless- Groupon’s launch of an app and dongle- enabled mobile terminal that is suit- based system for turning phones and tablet mobile-based services. Merchants can able for use in the hospitality sector. devices into payment acceptance devices. either configure their existing VeriFone or Additionally the terminals will make The integration of Groupon’s Ingenico machine with Breadcrumb, buy B+S’s multi-currency technology – B+S Breadcrumb service will be aimed at a Verifone vx520 from Groupon for $150, Dynamic Currency Conversion (DCC) merchants which already accept card or rent one to own for $15 per month on a – available to UK merchants. B+S DCC payments or which are not yet ready for year-long contract. ■ enables the terminal to automatically identify the payment card’s country of origin. The terminal then displays Swiff chip and PIN approved by Visa Ready programme the sales amount in sterling, and sub- sequently shows it in the cardholder’s mPOS payment provider Swiff has of our chip and PIN solution,” said Etienne domestic currency including the cur- received approval for its chip and PIN van den Bogaert, Swiff’s chief technology rency conversion rate. ■ mPOS solution for use with Visa pay- officer. “Both Swiff’s hardware and software ments through the Visa Ready programme. have been approved by Visa to ensure the The Visa Ready programme is aimed at solution meets all quality and security met- VeriFone hosts m-payments enabling payment providers to collaborate rics for mobile payment acceptance.” for French rail operator with Visa in m-commerce. Over the last year, the number of mPOS “We believe that the approval by Visa terminals increased 111%, and is expected POS terminal manufacturer VeriFone rewards the level of security and flexibility to grow over 300% by 2017. ■ is providing its PAYware Wynid man- aged payments solution to power passenger ticket purchases aboard Chase Paymentech launches Chase Checkout France’s national railroad operated by SNCF Group. Global merchant acquirer Chase accept card payments from their smart- Deployment began in April with Paymentech has announced the launch of phones with the new Chase Mobile the first 1,000 handheld devices that Chase Checkout, a range of solutions to help Checkout app and encrypted card reader, are planned to number 12,000 over merchants accept payments across an array which is available on Apple and Android three months and handle an esti- of channels, including in-store and online. platforms, or online or at a physical store mated 1,650,000 million payment Chase Checkout enables merchants to location. ■ transactions annually across the SNCF- managed rail systems, including the high-speed TGV trains. Adyen Shuttle mPOS solution now available in 17 European PAYware Wynid is a managed servic- es platform that delivers acceptance Adyen has announced that Shuttle, its tance via smartphones or tablets through a on mobile handheld devices used by mPOS solution, is now available in 17 Bluetooth connection. conductors to accept domestic and European countries following recent Since the launch of Shuttle in December international EMV card payments and launches in Switzerland, Norway and 2012, Adyen says it has witnessed huge process other functions such as tick- Denmark. Shuttle became the first fully demand from businesses ranging from high et sales and exchange, invoices and EMV-compliant mPOS device available in street retailers to taxi services and caterers. information services for passengers. ■ Europe last year, delivering payment accep- Shuttle is available on Apple and Android. ■

30 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com C

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Australian PSPs roll out MasterPass China to become largest online market asterCard has announced that MasterPass button on their websites. According to data from China’s 16 Australian payment service MasterCard’s head of market develop- Ministry of Industry and Information Mproviders (PSPs) will introduce ment and innovation for Australasia, Matt Technology (MIIT), China could over- MasterCard’s MasterPass e-commerce prop- Barr, said: “Having so many technology take the US in 2013 as the world’s osition across their respective merchant partners onboard illustrates the increas- largest online retail market, if the coun- customer bases, giving consumers the abil- ing consumer demand for digital wallets. try’s e-retail sales hit the equivalent ity to shop online. MasterPass technology offers shoppers of $280 billion at the end of 2013. The The 16 PSPs – Advam, ANZ, Ashop, peace of mind that their personal details US e-commerce sector accounted for BuyReply, Card Access Services, are safe, as well as a wider selection of $225 billion in 2012, according to the Commonwealth Bank, Ctel, EstarOnline, eWAY, payment options and quicker transaction US Department of Commerce, and the IP Payments, Merchant Warrior, NAB, NoQ, times, which can ultimately translate into current US e-retail growth rate of 16% Paycorp, Payment Express and Powerfront increased customer satisfaction and an would bring the 2013 total to $261 bil- – will integrate MasterPass by displaying the uplift in sales.” ■ lion. In the first half of 2013, online retail sales in China rose by 60.2% to reach the equivalent of $139.63 billion. WorldPay e-commerce transaction volume grows 45% Results show that more mobile traffic and sales can be expected as Chinese The e-commerce division of WorldPay has half of 2013 is testament to the business com- consumers purchased 244.4 million announced significant growth across all mitment to product development and sector- mobile phones in the first half of 2013, product groups with transaction volumes specific relationship management. We have with 91% (or 222.4 million) of them up 45% compared to H1 2012. In H1 2013, signed significant partnerships which further being smartphones. over 257 million gateway transactions were strengthen our end-to-end services, and the Data from MIIT also shows that total processed. Online transactions reached a new customer wins in 2013 demonstrate e-commerce in China reached the record rate of 320 transactions per second. the recognition and demand among global equivalent of $810 billion in the first Alternative payment transactions were merchants for our international reach through half of 2013. ■ a strong driver of growth, with the value over 200 alternative payment types, industry of payments processed increasing by 46% expertise and data insights. The second half in H1 2013 compared to the same period in of 2013 looks set to be even more successful,” Facebook pilots 2012. The business is confident that it can comments Floris de Kort, CEO, e-commerce e-commerce system deliver 20% growth in 2013, with alternative division WorldPay. payments growing the fastest. A study by research company eMarketer Facebook is planning to test a sys- “The growth that we have seen in the first forecasts that UK business-to-consumer tem that will allow users to make in- (B2C) e-commerce sales will reach £62.49 app purchases using their Facebook Global e-commerce penetration 2013 billion in 2013, increasing to £89.73 bil- log-in details. The system will work

UK 87.2% lion or 16% of total UK retail sales by 2017. by enabling online shoppers to give Germany 80.2% According to eMarketer, at £44.06 billion, Facebook their credit card details and Japan 78.3% UK retail e-commerce sales will represent make purchases on partner e-com- France 78.1% Sweden 76.3% 70.5% of B2C e-commerce sales in 2013. This merce mobile apps without needing Australia 76.2% percentage is expected to rise to almost to enter their billing details. Netherlands 74.6% South Korea 71.1% 72.5% or £65.05 billion in 2017. Although Facebook’s move into the Canada 63.1% The study also shows that sales via mobile e-commerce space has brought com- Argentina 54.5% Italy 49.3% phones and tablets are expected to grow parisons with PayPal, payments made US 45.7% by 71.8% in 2013 to reach £6.61 billion, via this test system will still go through Worldwide 40.5% accounting for 15% of UK retail e-commerce an e-commerce app’s regular payment Russia 39.7% Brazil 36.0% sales, and predicts that retail m-commerce processor. Facebook benefits by get- India 23.5% sales will continue to increase by more than ting data about whether Facebook ad Mexico 20.4% £2 billion per year over the next four years clicks lead to sales. ■ Source: eMarketer, June 2013. to reach £17.24 billion in 2017. ■

32 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com Payments takes a starring role at RBTE 2014 The new floorplan is RBTE is Europe’s largest gathering of the retail community. filling up with As the landscape of payments evolves, RBTE provides the platform for the changing needs of many vendors specialising in payments – many of which are increasingly 75% of the offering solutions beyond pure payments, such as analytics and loyalty. space already As well as being of interest to the finance department, other stakeholders including operations, marketing, eCommerce, fraud and risk, store systems and of course the taken! IT department are getting involved in the decision making process - and all of these job functions visit RBTE. Meet thousands of top retailers such as: Agent Provocateur, Ahold, American Apparel, Anthropologie, Arcadia Group, Argos Limited, Asda, ASOS, Auchan, Aurum Holdings Ltd, B&Q, At RBTE you will meet all the Benetton Retail, Carrefour, Debenhams, El Corte Ingles, Elkjøp Nordic AS, Gebr Heinemann, Harvey Nichols, Heathrow decision makers and influencers: Express, Home Retail Group, Ikea, Jessops, Jimmy Choo, John Lewis, Morrisons, Moss Bros, Neals Yard Remedies, New Look, Next Retail Ltd, Odeon & UCI Cinemas Ltd, Otto, Paul Smith Ltd, Primark, Ralph Lauren, Tesco, The Disney Store, TJX Europe, Wilkinson

“We had Tesco, Asda, House of Fraser and FOR THE Morrisons all on ENTIRE TEAM the stand at one time – you can’t get a better calibre than that.” Ian Patterson, Sales Director, Box Technologies

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Oberthur selected by Movistar Stripe launches in the UK Chile and Banco Santander Chile Stripe aims to enable businesses to accept card payments on websites and in mobile apps, with the aim of replacing berthur Technologies has been of the year. The NFC solution provided by legacy merchant processors and banks. selected by Movistar Chile, a Oberthur Technologies includes a TSM to According to Stripe, it has already Omajor mobile operator in Latin deploy and manage the service over-the- achieved significant scale in the US America, and Banco Santander Chile, one air (OTA), NFC SIM cards, a mobile PayPass and Canada, processing millions of dol- of the largest retail and commercial banks payment application and a mobile wallet lars each day for companies including in Latin America, to be their Trusted Service allowing end-users to activate their pay- Heroku, Foursquare, Evite, Grooveshark Manager (TSM) and provide an end-to-end ment cards and view their transactions his- and Reddit. solution for their NFC pilot. tory from their Samsung Galaxy S3 phones. Businesses can accept all major card After the initial trial with selected end- Banco Santander’s MasterCard payment types including Visa, MasterCard and users and participating shops in the card will be fully secured by the NFC SIM American Express, while retaining full Santiago area, the service will be opened card. Once the payment card is activated control over the check-out experience throughout Chile with 5,000 compatible on their NFC SIM cards, the end-user can tap on their website. For the first time, payment terminals expected by the end the phones onto contactless terminals. ■ Stripe is launching support for multiple currencies: UK users can charge in US dollars, sterling and euros immediately. Monitise, Visa Europe and IBM accelerate cloud m-commerce Pricing in the UK starts at 2.4% + £0.20 per transaction + VAT, with volume dis- IBM, Monitise and Visa Europe have IBM’s Smarter Commerce initiative, member counts available upon request. ■ teamed up to enable Visa Europe to pro- banks from Visa Europe can accelerate the vide its member banks with new mobile deployment of a range of banking, payment and commerce services mobile services on all types Fifth Edition in the cloud for its customers. of devices. IBM will help Monitise extend and scale Visa predicts that by 2020, the adoption of these services with Visa more than half of its transac- New for 2013 Europe and develop addi- tions will be carried out on tional services to bring a mobile device. Monitise’s 85 pages Figures include to the mobile mar- Bank Anywhere, Pay cards in circulation ketplace. Anyone and Buy Anything and spending for By support- solutions form the basis of more than Largest ing Monitise Visa Europe’s forthcoming 880 credit & solutions with mobile offerings. ■ debit card Payment Card Issuers issuers and Merchant Acquirers from 115 countries in Worldwide all world regions EMVCo qualifies FIME’s automated RF test tool a 2013 Nilson Report Publication Asia/Pacific, - EMVCo has approved the latest version of MasterCard, UnionPay and Canada, Latin America, © HSN Consultants Inc. 2013 THE NILSON REPORT, www.nilsonreport.com/largest issuers. Reproduc FIME’s automated EMV contactless analogue Visa. It accredits laborato- Europe, United States, ing or allowing reproductioncopyright or dissemination violation subject of any toportion substantial of this fines. document in any manner is a test bench for EMV Contactless Specification ries and qualifies test tools and Middle East/Africa Level 1. The tool is available for purchase as that in turn can deliver EMV Also lists an off-the-shelf product for in-house test- product approval. 250 Merchant Acquirers from 64 countries in all world regions ing and is currently used by FIME as part of This particular EMVCo its EMVCo accredited laboratory offering to contactless specification validate EMVCo Proximity Integrated Circuit describes the minimum Order Today Cards (PICC). functionality required www.nilsonreport.com/largestissuers EMVCo is the EMV standards body col- for operation and market lectively owned by American Express, JCB, interoperability. ■ www.paymentscardsandmobile.com payments cards and mobile | September | October 2013 35 2013-14 EDITION ORDER NOW Payment Cards Statistical Yearbooks 2013-14

Stay one step ahead with deep industry information and a wealth of statistics from central banks, interbank companies and associations and individual banks.

In order to respond to the changing and new payment industry markets, the 2013-14 edition Yearbooks have been enhanced by adding: • More issuer information – issued brands by issuer • More acquirer information – acceptance brands by acquirer • More on contactless cards and digital wallets • More e-/m-commerce information, e-payments mix and statistics • More on notable mobile payments initiatives • More on basic fraud trends and statistics • Mobile merchants and MPOS terminals • Notable market trends – battlefields in the payment industry European Payment Cards Yearbook and Eurasian Payment Cards Yearbook 2013–14 are published in November 2013 and will be available as a complete volumes or as individual country profiles. For further details, to view full synopsis or download a sample country report visit: www.paymentcardyearbooks.com

www.paymentcardyearbooks.com contracts

Cardtronics acquires Payzone UK SIA acquires Emmecom

European payment processing group and German ATM businesses SIA has acquired a 51% stake in Italian telecom firm Emmecom, which spe- ayzone Group, a European payments machines in the UK, of which 1,800 are cializes in fixed, mobile and satellite and ATM terminals company, has free-to-use ATMs, located primarily at telecom networks, with an option for Pagreed to sell its ATM business in the independent convenience stores and ser- the remaining 49% to be exercised as UK and Germany to global ATM services vice stations. In Germany the business of 2016. provider Cardtronics. Payzone Group is trades as Cardpoint where it operates SIA will also launch new network solu- majority-owned by private equity firm 800 ATMs. tions for remote monitoring based on Duke Street, which has restructured the In conjunction with this deal, Cardtronics M2M (machine to machine) technology, business in order to effect a phased sale of will launch a new corporate identity for its which permits various devices – such Payzone assets. European operations, Cardtronics Europe, as sensors, probes, video cameras, etc. Payzone will continue to own pay- which will combine Cashzone, Cardpoint – to be controlled remotely, and the ment terminals operations in Ireland, and Bank Machine, Cardtronics’ existing automatic transmission of status reports UK, Sweden, Romania and Greece and UK subsidiary. to central information collection and the group will be debt-free following From a consumer point of view, the Bank handling points. the disposal. Machine and Cashzone brands remain SIA’s objective is to create a single The total cash consideration for the intact in the UK, as well as the Cardpoint technology infrastructure operative at sale is £107.5 million. Cashzone has 7,100 brand in Germany. ■ European level, capable of simplifying communication between merchants and banks. Giesecke & Devrient to take over UK’s Currency Tech This platform will gather the traffic of cards payments generated by the European payment technology provider of the cash handling and banknote busi- multi-channel POS terminals and deliver Giesecke & Devrient Great Britain (GDGB), ness. Pursuing our growth strategy, we it securely and reliably to the authorisa- and UK cash-handling specialist Currency now have an excellent base from which to tion systems of banks, terminal handlers Tech have entered into a definitive agree- expand the business, enter into new mar- and other acquirers. ■ ment, under which GDGB will acquire kets and enhance our offering to existing all shares of Currency Tech. By acquiring customers. With our innovative technol- Currency Tech, GDGB is complimenting ogy we are ideally positioned to leverage CVC Capital buys Skrill its existing product and service portfolio. Currency Tech’s potential to the fullest”, Private equity firm CVC Capital Partners “G&D has longstanding and excellent stated Donald MacDonald, managing has announced a deal to buy a majority expertise along the complete value chain director of GDGB. ■ stake in UK online payments provider Skrill Group from Bahraini investment firm Investcorp for around €600 mil- D+H closes $1.2bn Harland acquisition lion. Investcorp will keep a “substantial” minority in Skrill and retain a seat on its Canadian financial technology firm Davis cross-selling and create new revenue oppor- board when the deal closes, subject to and Henderson (D+H) has completed the tunities by providing existing and new clients regulatory approvals. $1.2 billion cash acquisition of US counter- with a more powerful set of tools. Skrill was established in 2001 and is part Harland Financial Solutions. Previously Gerrard Schmid, CEO, D+H, said: “We look one of Europe’s largest online payment owned by Harland Clarke Holdings, Harland forward to using our complementary tech- systems and among the world’s biggest claims thousands of financial institution nologies and expanded capabilities to meet independent digital wallet providers, clients for technology covering branch the broader needs of our combined client with over 36 million account holders. automation, business intelligence, core pro- base of 6,200 and to forge an even stronger In 2007, Investcorp paid €25 million for cessing, enterprise content management, value proposition for the future as we con- a controlling stake in the company. By compliance, payments, risk management centrate on growing our presence among 2012 Skrill’s revenues were more than and self-service. the 13,000 banks and credit unions who form €200 million. ■ D+H hopes that the deal will fuel product our available market.” ■ www.paymentscardsandmobile.com payments cards and mobile | September | October 2013 37 conferences Industry gears up for Cartes 2013

he Cartes 2013 Secure Connexions demand for added-value services, the Event will be taking place at the Paris- introduction of high-end SIM cards includ- Conference diary TNord Villepinte Exhibition Centre ing EMV, as well as the promise of smart from 19 to 21 November. This year’s theme, identification in the largest country of Latin Pay 360 “Building Trust in Mobile Life”, will look to America, promises huge growth opportu- 2 October, London the rapid pace of development occurring nities for the industry. www.yourgx.com across all fields related to mobile payment, One of the highlights of this year’s event Money 2020 access and ID technology will undoubtedly be the “Digital Wallets & 6-10 October, Las Vegas Brazil will be this year’s guest of honour eMoney” session on 21 November, chaired www.money2020.com/ country. With a population of over 180 by Daniel Chatelain, founder and manag- 11th CEE Retail Banking Forum 2013 million people and sustainable economic ing director of BayPay Forum of the US. 9-11 October, Budapest, growth, Brazil offers numerous oppor- When it comes to wallets and e-money, http://finance.flemingeurope.com tunities for the industry. The each of the key players in the eco-system, Digital & Mobile Wallet retailers, financial institutions, MNOs, tech- 10-11 October, London nology providers, cell phone manufactur- www.dmwsummit.com/ ers, and payment providers are going to GSMA NFC & Mobile Money Summit have very different strategies. This session 14-17 October, New York will explore the forces that are changing www.nfcmobilemoneysummit.com money in the digital age. ■ SmartCards Expo 2013 16-18 October, New Delhi, www.electronicstoday.org Money 2020 wide community of innovators beyond just Gitex payments and financial services to include 20-24 October, Dubai www.gitex.com The inaugural Money2020 event in 2012 retail, mobile, advertising and marketing established an entirely new scale and stan- services and other sectors that are pro- Apps World Europe dard for events in emerging payments foundly changing how consumers and busi- 22-23 October, London Apps World Europe and financial services. This year’s event is nesses manage, spend and borrow money. expected to bring 4,000 attendees, includ- Money2020 explores the macro trends Merchants & Payments 2013 22-23 October, London ing over 300 CEOs, from more than 1,250 that form the common thread in payments www.icbi-events.com/FKP2354MPW companies and 50 countries around the and financial services innovation, such as world to Las Vegas between October 6-10. the mobile internet, open platforms and Risk, Regulation and Innovation in Mobile Payments The event aims to connect the world- consumer empowerment.” ■ 5 November, London www.mobilepayments-rri.com Advertisers index The Future of Nordic Banking 5-6 November, Copenhagen BAI Retail Delivery P34 OpenWay Group Cover P2 www.bai.org/retaildelivery/index.asp www.openwaygroup.com http://marketforce.eu.com/events/ BAI Retail Delivery Cartes 2013 Cover P3 Payment Cards Yearbooks P36 www.cartes.com www.paymentcardyearbooks.com 5-7 November, Denver www.bai.org/retaildelivery Datacard P9 Retail Business Technology Expo P33 www.datacard.com www.rbtexpo.com Mobile Money Global FIS P13 [email protected] 5-7 November, Dubai www.fisglobal.com Risk, Regulation & Innovation P25 www.mobile-money-gateway.com/event Merchant Payments Ecosystem 2014 P31 www.mobilepayments-rri.com 4th Mobile Payment China 2013 www.merchantpaymentsecosystem.com Six Payment Services P11 7-8 November, Shanghai, China Nilson Report P35 www.six-payment-services.com/solutions www.mobilepaymentchina.com/ www.nilsonreport.com/largestissuers VeriFone Cover P4 Cartes 2013 Nordic Card Markets P15 lp.verifone.com/global/cartes 19-21 November, Paris www.nordiccardevent.co.uk Email:[email protected] www.cartes.com

38 payments cards and mobile | September | October 2013 www.paymentscardsandmobile.com 172 Speakers 435 Exhibitors 137 Countries

19,072 Visitors

BUILDING TRUST IN MOBILE LIFE

19-21 NOVEMBER 2013 Register on www.cartes.com Photo credit: Shutterstock, Getty Images. Shutterstock, Photo credit:

EXHIBITION & CONFERENCE SECURE SOLUTIONS FOR PAYMENT, IDENTIFICATION AND MOBILITY Paris Nord Villepinte FRANCE

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