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 www.paymentscardsandmobile.com payments cards and mobile | September | October 2013 3 PCM_MA13_40pp.indd 39 20/03/2013 15:39 contents 16 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 Financial Services 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. ■ Stripe 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 Skrill. ■ banks to lead way in Groupon has linked up with POS terminal mobile manufacturers Ingenico and VeriFone 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. ■ Chase Paymentech The Cartes 2013 Secure Connexions could do so using services launches Chase Checkout. ■ Adyen 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 Braintree has rewrite the terms of his credit card 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.