www.cardsinternational.com Issue 582 / august 2020
GLOBAL WARNING
REDUCED CONSUMER SPENDING OFFSETS CONTACTLESS GAINS DURING COVID-19
FEATURE ANALYSIS COUNTRY SNAPSHOTS
How a new breed of scams RSB’s Eurobonds default Key payments market can cause fatal damage to and its wider impact on the data and analysis for Chile, targeted businesses bank’s reputation Russia and South Africa
CI August 2020 582.indd 1 18/08/2020 14:09:02 contents this month
COVER STORY NEWS 10 05 / EDITOR’S LETTER 06 / DIGEST • UnionPay now accepted by over 800,000 SumUp merchants • US challenger bank Dave partners with Mastercard • US coin shortage boosts credit card use • Mastercard develops sustainable card programme • Fintech Tide enters partnership with Mastercard • The Covid battle of the Somme: $1m prepaid card giveaway • Barclaycard taps FreedomPay to provide end-to-end experience • Gift card industry launches £2.3bn campaign COVID AND PAYMENTS 07
Editor Reporter: Director of Events: Douglas Blakey Evie Rusman Ray Giddings +44 (0)20 7936 6858 +44 (0)20 7936 6975 +44 (0)20 7936 6512 [email protected] [email protected] [email protected]
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2 | August 2020 | Cards International
CI August 2020 582.indd 2 18/08/2020 14:09:06 contents august 2020
COUNTRY SNAPSHOTS 16 / CHILE 18 Cash remains the preferred method of consumer payment in Chile, accounting for 62.5% of the total payment transaction volume in 2020. However, card transactions are gradually gaining ground 18 / RUSSIA The Russian payment card market recorded a strong CAGR of 22.7% between 2015 and 2019 in terms of overall transaction value. Consumers increasingly prefer card payments for low-value transactions 20 / SOUTH AFRICA Use of payment cards in South Africa is growing at a healthy pace, supported by a growing banked population due to financial inclusion programs, the availability of basic bank accounts, and reduced interchange fees FEATURES 20 10 / COVID AND PAYMENTS 14 / E-COMMERCE FRAUD The rising demand for non-cash payments A daunting new age of mega-fraud is upon us. will drive card payments at the point of sale, No longer content to inflict financial loss, the but around the world there are a number of new breed of scams can cause fatal damage to interesting regional variations as a result of a brand, drive customers away and force the Covid-19, reports Douglas Blakey target out of business. Mohamed Dabo reports 14
ANALYSIS 22 / RSB AND AMEX In April, RSB owner Roustam Tariko was accused of defaulting on Eurobonds for a second time. What does this mean for the bank’s reputation? Evie Rusman speaks to Alexey Sanaev, chief financial analyst at Finam
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CI August 2020 582.indd 3 18/08/2020 14:09:09 11th Annual Retail Banker International Asia Trailblazer Summit & Awards 2020 9 October 2020 Singapore
Share experiences, challenges and opportunities with an unrivalled selection of peers from the private banking and wealth management global community.
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CI August 2020 582.indd 4 18/08/2020 14:09:09 editor’s letter
Deferral programmes skew positive July US card stats
Douglas Blakey, Editor
nother month and another set of resilient As cardholders experiencing hardship due to Covid exit the delinquency and charge-off statistics from the payment deferral programme, the numbers will be corrected. A leading US credit card issuers (see table). We know from the Fed that credit card debt in the US is Take JPMorgan Chase for example: the July credit-card down sharply since the Covid crisis started. For example, total delinquency rate falls to 0.99% from 1.07% in June, and revolving consumer debt – in other words, mainly credit card th compares favourably with 1.15% in July 2019. Moreover, the debt – fell to $995.6bn in May from $1.07bn in March, a drop 11 Annual Retail Banker net charge-off rate of 2.03% for July compares with 2.06% in of almost 8% in just two months. June and 2.21% in July 2019. Meantime, for perfectly understandable reasons, banks are International Asia Trailblazer At Bank of America, the July credit card delinquency rate also taking a risk-averse approach, with Chase among leading declines to 1.16% from 1.30% in June and compares with issuers reported to be cutting credit card limits for certain Summit & Awards 2020 1.57% in July 2019. Again, the Bank of America net charge-off cardholders. For its part, Amex has withdrawn introductory 0% rate is moving in the right direction: for July it drops to 2.12% offers on balance transfers. So, with the above figures in mind, 9 October 2020 against 2.15% in June and 2.49% in July 2019. it is sobering when a report from Deloitte forecasts charge-off Singapore And at Citi, the July delinquency rate drops from 1.47% in rates of as high as 8.1% by as early as 2021. June to 1.43%, and compares with 1.57% in July 2019. The Citi To forecast the impact of the Covid pandemic on the credit charge-off rate drops from 2.63% in June to 2.42% in July, and card charge-off rate from 2020 to 2024, Deloitte studied compares with 2.91% in July 2019. the relationship between the US unemployment rate and At first glance, all positive. Similar positives can be taken banks’ credit card charge-off rates over the past 20 years. from the July numbers from Discover, American Express, Charge-off rates showed a one-to-one relationship with Capital One and Synchrony. There is, however, a ‘but’ – and it is the unemployment rate during the 2008-09 financial crisis. a big one. The July numbers are skewed to a degree by the card However, the correlation somewhat weakened following the Share experiences, challenges and issuers’ deferral programmes related to Covid. peak, with a deceleration in charge-off rates. Charge-off rates are expected to show a lower correlation SELECTED LEADING US CREDIT CARD ISSUERS: with unemployment in 2020-24. As a result, argues Deloitte, opportunities with an unrivalled selection CHARGE-OFF AND DELINQUENCY RATES the increase in charge-offs will likely be lower in magnitude compared with the rise in unemployment, due to government of peers from the private banking and apr 20 may 20 jun 20 jul 20 intervention with unemployment benefits, a financially American Delinquency 1.70% 1.60% 1.50% 1.40% stronger consumer, issuers’ proactive approach to help wealth management global community. Express Charge-off 2.70% 3.00% 2.60% 2.60% distressed borrowers, and nuanced differences in the nature of unemployment compared to the 2008-09 crisis. Bank of Delinquency 1.55% 1.46% 1.30% 1.16% The report entitled US Consumer Payments in a Post- America Charge-off 2.81% 2.50% 2.15% 2.12% Covid-19 World: How to Bolster Payments Institutions’ Growth Delinquency 3.58% 3.15% 2.74% 2.44% in Challenging Times and is well worth a read. Mercifully, away Capital One from the headline 8.1% charge-off rate forecast, there are some Charge-off 4.93% 4.49% 4.15% 3.82% positive takeaways. It notes that there will be an acceleration Delinquency 1.27% 1.20% 1.07% 0.99% of recent trends in the way consumers live, work and pay, and Chase Charge-off 2.43% 2.34% 2.06% 2.03% integrate real and digital more in the post-Covid world. Delinquency 1.69% 1.59% 1.47% 1.43% And it suggests that there are exciting opportunities for Citigroup payments institutions to reimagine their roles, especially in Register now on Charge-off 2.96% 3.12% 2.63% 2.42% the areas of driving social impact, modernising the payments Delinquency 2.56% 2.36% 2.17% 2.03% system, creating value beyond card payments and reorganising Discover rbiasiatrailbalzer.verdict.co.uk Charge-off 3.98% 4.07% 3.65% 3.42% around customers as opposed to products. Deloitte also makes the obvious point that card networks Delinquency 4.10% 3.60% 3.10% 2.90% Synchrony need to work with issuers in order to accelerate the general Charge-off 5.90% 5.10% 5.10% 4.80% issuance of contactless cards, and with acquirers to set up Source: CI contactless POS terminals. <
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CI August 2020 582.indd 5 18/08/2020 14:09:10 News | Digest
news digest UnionPay now accepted by over 800,000 SumUp merchants Switzerland, Italy, Netherlands, Poland, Portugal and Sweden. Zhihong added: “We are delighted to have expanded our relationship with SumUp, a truly unique market leader in the payments industry, which has been at the forefront of developing innovative technology that every merchant can use.” To date, SumUp is accepted by over 2 million merchants worldwide and is active in 32 countries. The fintech’s card readers pair with both Android and iOS smartphones to verify payments through the internet. Originating in China, UnionPay is now accepted in 40 countries and regions, with its coverage rate increasing to 70% of all Card payment operator UnionPay easily and conveniently shop at a much bank card-accepting merchants in Europe. International has announced that the greater number of SumUp’s European Through its partnership with SumUp, number of SumUp merchants accepting merchants. We believe this will be UnionPay aims to enable local SMEs to be its services has risen in the last 12 months. advantageous to UnionPay cardholders, well prepared to welcome tourists from According to the company, over 800,000 whether Chinese or European, as well as to China and other parts of the world when SumUp merchants now accept UnionPay the European merchants.” global tourism recovers. cards. The two companies started working Earlier this year, UnionPay released Wei Zhihong, UnionPay International’s together in 2012, and have since expanded a new Content and Service Platform market director and head of Europe, their partnership. As a result, UnionPay to develop Pay+, a digital ecosystem to said: “Today’s announcement represents cardholders can now pay via EMV support partners during Covid-19. The yet another step forward in our rapidly and contactless payment methods at services aims to enable institutions to expanding global footprint, and importantly merchants throughout Europe, including deliver instant payments for utilities, will enable UnionPay cardholders to more the UK, Ireland, France, Germany, Austria, transport, lifestyle and entertainment. < US challenger bank Dave partners with Mastercard US digital challenger Dave has announced Dave banking charges $1 per month to cial lives or looking to improve their finances, an exclusive agreement with Mastercard to enable access to features including: but we always had the long-term vision of operate its debit cards. • Automated budgeting: Dave uses ma- becoming their primary bank. Dave began a limited, early release roll-out chine learning to tell customers how much “As Dave’s spending account rolls out to of Dave Banking in May. The app-based they have available to spend until they millions of our customers over the com- spending account includes a Mastercard debit receive their next pay cheque; ing months, we are now seeing that vision card, and features no hidden fees or mini- • Helpful texts and alerts: When Dave’s realised. With Mastercard’s focus on financial mum balances. machine learning budgeting tool antici- inclusion and its alignment with our mission, Since the May release, 100,000 customers pates an upcoming expense that may cause they are the ideal partner for Dave’s next have signed up the service; according to Dave, a customer to go overdrawn, it sends a text phase of growth.” it is on track to sign up 1 million banking or alert, and Sherri Haymond, executive VP – digital customers by the end of 2020. • ‘Side Hustle’: Dave’s exclusive job-finding partnerships at Mastercard, added. “Dave is Product features include a $100 advance tool, Side Hustle, helps customers find clearing the path for Americans seeking finan- at no cost from an upcoming pay cheque. side income opportunities such as dog cial health through its digital banking tools. Through a partnership with LevelCredit, walking or tutoring. “Given our shared commitment to bringing Dave Banking customers can also augment consumers into the digital economy through their credit scores, with Dave claiming that Dave co-founder and CEO Jason Wilk next-generation financial products, we’re ex- customers who use the credit-building feature said: “We started Dave initially as a set of cited to be working with Dave as the exclusive can boost their credit score by 50 points. tools for Americans just starting their finan- network for its emerging banking services.” <
6 | August 2020 | Cards International
CI August 2020 582.indd 6 18/08/2020 14:09:11 News | digest
US coin shortage boosts credit card use miles they can put back into their wallet or redeem for gift cards and future travel. During their second-quarter 2020 earn- ings calls, Chase and Wells Fargo noted that spending with debit cards was holding up even better than credit card purchases. Economists say that disruption, rather than shortage, is a better description of the situation. Once normal circulation begins, they explain to worried consumers who might think the country is running out of money – the title of at least one scare-in- ducing video making the rounds on social media – the disruption will ease out. A contributing factor to the supply deficiency is that ‘coin businesses’ such as laundromats, vending machines and car washes largely stopped operating during the pandemic as a result of social distancing and stay-at-home measures. These businesses are Covid-19 has significantly disrupted the cards and mobile wallets, such as Apple Pay, key components in the process of returning supply chain and normal circulation pat- to avoid germs during the coronavirus pan- coins to banks to redistribute back into the terns for US coins, leading to the growing demic while also expediting the checkout economy. Since they have stopped receiving use of debit and credit cards. process at stores. money, the recirculation of coins has been Banks are receiving far fewer coins from A 2020 American Express Digital Pay- significantly cut back. customers than usual, and coin production ments survey found that 58% of consumers In economic terms, the current coin at the US Mint has dropped significantly who have used contactless payments in the situation is the result of a low velocity of due to measures it has put in place to protect past say they are more likely to use them circulation, or how quickly a single unit of employees. As a result, more Americans are now than ever before. Mastercard Contact- money changes hands in an economy over a turning to credit cards. Some retailers have less Consumer Polling found that 51% of specific period. even posted signs saying they can accept US consumers are now using some form of Simply put, coins are not moving fast only exact change or electronic payment. contactless payment. enough to meet demand. The Federal Re- US consumers have increasingly caught More people are rediscovering the benefits serve has therefore created a US Coin Task on to the trend of using tap-to-pay credit of credit cards, such as cashback, points and Force to try to redress the undersupply. < Mastercard develops sustainable card programme Mastercard has been working with global Mauritius Commercial Bank and Santander, industry players to develop a sustainable which will issue cards shortly. card programme in an effort to combat Marco Briata, head of digital and climate change. payments at Crédit Agricole Italia, said: A directory of sustainable materials and “We know our customers are looking for vendors for card products is now available more sustainable products and looking for to Mastercard consumers worldwide. The ways to effect positive change in the world. aim is to make sustainability the preferred This approach has enabled us to not only option for all financial institutions and drive deliver on a consumer need, but also offer enhanced innovation. a product that’s in line with our corporate Ajay Bhalla, president of cyber and sustainability values.” intelligence at Mastercard, said: “Our goal The new initiative will lead to the launch is simple: we want to help banks offer more of Mastercard’s global certification scheme eco-friendly cards to consumers, and we for approved sustainable cards. In addition, are taking concrete steps to bring about it builds on the company’s Greener that change. This way, everyone benefits Payments Partnership with Gemalto, – it’s better for the environment, it’s to address these urgent environmental Giesecke+Devrient and Idemia in 2018. better for business and it meets evolving challenges.” The alliance was formed to reduce first-use consumer needs. So far, over 60 financial institutions have PVC plastic in card manufacturing. “We’re excited to see our efforts gaining issued cards with approved materials made Around 6 billion payment cards are made traction in so many parts of the world, from recyclable, bio-sourced, chlorine- each year, and are typically produced from and hope more organisations will join us free, and degradable and ocean plastics. PVC, which has a high chlorine content that as we collectively use our power for good These institutions include Crédit Agricole, can turn into toxic pollution. <
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CI August 2020 582.indd 7 18/08/2020 14:09:12 News | Digest
Fintech Tide enters partnership with Mastercard funds directly with Mastercard. innovative payments features onto the Tide Tide CEO Oliver Prill said: “Entering Platform. a strategic partnership with Mastercard Scott Abrahams, SVP of business devel- and becoming a principal card issuer is an opment and fintech at Mastercard, said: extremely exciting step for Tide. We are “Tide is revolutionising business banking looking forward to working closely with for SMEs, and we are proud to have worked Mastercard to further develop the innova- with it over the past five years since its tive service we offer to our members, and to inception. We are delighted to be expanding push further forward in our mission to save our relationship with Tide to continue to de- small business owners time (and money) on velop and offer its ground-breaking services their banking and admin. to small business owners.” “This partnership is testament to the The announcement comes as Tide has extreme growth Tide has experienced in been gaining traction in the UK. In October the past few years. With over 200,000 SME 2019, the challenger raised £44.4m ($54.3m) Business banking platform Tide has members now using the platform, Tide in a first-round of Series B funding led by announced a multi-year partnership with is rapidly increasing its market share and specialist fintech investors. Mastercard to further enhance its SME quickly catching up to the traditional play- The funding was led by the SBI Group and banking services. ers. I look forward to seeing what we can Augmentum Fintech to help Tide increase As part of the alliance, Tide has also achieve in partnership with Mastercard.” its capital. Tide hopes to increase its share of become a principle Mastercard issuer. The The two companies plan to work together the UK business banking market, and also to partnership means Tide can now settle to deliver leading card functionality and expand internationally. < The Covid battle of the Somme: $1m prepaid card giveaway Officials in Somme, the northern French department famous for a First World War battle, are issuing prepaid bank cards to jump-start consumption and revive the Covid-stricken local economy. As part of an anti-Covid offensive, local government officials have ordered the distribution of 13,000 prepaid cards of €80 ($94.4) each throughout the department. Departments are one of three government and administrative divisions of France below national level, ranking between administrative regions and communes, which include townships or municipalities. towards “helping the most Covid-impacted Of the €50m war chest, €18m will be The Somme department’s move has a local economies to take off immediately”, dedicated to emergency aid in the culture, dual purpose: to thank Covid-19 frontline the department said in a release. tourism and sport sectors, and €14m will be responders and to rouse the region’s In June, the department council adopted devoted to social emergencies. dormant economy. The preloaded cards a €50m post-Covid recovery programme. The department has stated an aim “to are being handed out across the region as Its plan of action rests on three pillars: increase purchasing power [in Somme], to tokens of appreciation to healthcare and • To assist professionals caring for allow inhabitants to discover or rediscover social workers who are spearheading the children, the elderly and the disabled; to the quality of its restaurants, and to enjoy fight against coronavirus. improve the living conditions of those its tourist, cultural and leisure sites while The $1m initiative is the result of an under their care; and to facilitate the sparking a rapid resumption of activity”. unprecedented partnership with the return to work; The prepaid cards can be used anywhere Caisse d’Epargne Hauts de France and • To provide emergency assistance to there is an electronic payment terminal. Natixis Payments, a subsidiary of the BPCE the culture, tourism and sports sectors; This includes nearly all restaurants, cafes, banking group which specialises in payment to boost consumption and the local bookstores and places of entertainment solutions. economy; – such as movie houses, concert halls, Department officials hope the operation • To promote local spending on work, shows, tourist attractions and exhibitions will galvanise local spending in the tourism- leisure and travel; to encourage – exclusively in the Somme. The cards are dependent economy. The crusade for sustainable development and preserve valid until 31 December 2020, and can be local self-sufficiency is specifically geared biodiversity. used several times. <
8 | August 2020 | Cards International
CI August 2020 582.indd 8 18/08/2020 14:09:15 News | Digest
Barclaycard taps FreedomPay to provide end-to-end experience Barclaycard has tapped FreedomPay to sector – to help them offer the best of scale, with a reputation for trust and provide a seamless end-to-end payment payment experience possible to their security, to help us with that journey. experience to Barclaycard customers in a customers.” “FreedomPay’s global reach is unique number of sectors. Through FreedomPay integrations in the world of commerce, and working Through the partnership, FreedomPay’s with services such as Oracle Opera and with Barclaycard we will strengthen our data-driven payment solutions will be Pay at Table, diners can pay digitally from capabilities across all continents. We available to Barclaycard customers. their seat. FreedomPay’s association are very excited to see the partnership FreedomPay also aims to enhance with Ingenico’s Tetra platform also means prosper.” Barclaycard’s offering by providing businesses can use the entire range of In July, Barclaycard extended its increased access to different payment wireless and Bluetooth-powered PIN entry relationship with SAP to make its Smartpay methods and technologies. devices. payments gateway product available to Nicole Olbe, MD of partnerships at FreedomPay also supports mobile SAP customers in Europe. Barclaycard, said: “This exciting new wallets such as Apple Pay and Google Pay, Through the alliance, businesses signed partnership shows our ambition to offer with plans to add AliPay, WeChat Pay and up to the SAP Commerce Cloud will have customers best-in-class payment solutions China Union Pay in the near future. access to SmartPay, which enables flexible that help them grow. The FreedomPay FreedomPay president and CTO Chris payments. The platform also supports one- platform complements and enhances our Kronenthal said: “We have ambitious click purchases and allows buyers to use a own, and gives benefits to merchants – expansion plans across Europe, and variety of cards, currencies and payment particularly in the hospitality and leisure Barclaycard is a critical acquiring partner methods. < Gift card industry launches £2.3bn campaign The gift card and voucher industry, led by the Gift Card & Voucher Association (GCVA), has launched a campaign to drive high street recovery in the UK. GCVA has urged the government to raise the tax-free gift card limit from £50 ($65.6) to £500, which could bring an estimated spending boost of over £2bn. The proposal would also encourage UK employers to use the scheme to thank staff for their hard work throughout Covid-19. The scheme is designed to leverage the rising demand for gift cards, which officially overtook physical gifts during lockdown. During this period, 14% of shoppers bought a gift card for somebody else, outselling offer a much-needed solution that would scheme in Ireland allowing employers to physical gifts at just 12%, and 21% pur- boost retailers’ fortunes now. We just need make a single one-off, tax-free payment to chased gift cards to support their favourite to incentivise businesses to make greater use employees of up to €500 ($591) per annum businesses. of them, and we may have a simple, quick- in non-cashable rewards. GCVA director general Gail Cohen said: win solution.” Schemes involving gift cards and vouchers “While the Summer Statement brought with Cohen continued: “If the tax-free limit for tend to be preferable over policies involving it some welcome announcements, more employee gifting was to be raised perma- VAT cuts or cash giveaways, because gift must be done to support high street retail, nently, and even just a 10th of employers cards must be spent at businesses in certain leisure and hospitality businesses, many of took advantage of the new legislation to sectors, as opposed to being put into savings. which have been hardest hit by the turbu- thank their loyal staff, this could be worth According to GCVA research, 98.6% of lence of the past few months. billions to struggling UK businesses just gift cards are spent within a year of being “Gift cards are a proven way to signifi- when they need it the most.” received, with over half spent within days. cantly increase shopper demand and spend, The permanent increase initiative follows Furthermore, shoppers top up gift card which improves high street businesses’ similar proposals intended to kick-start purchases by an average of 66.4% with their bottom lines. Through this, gift cards can economic activity abroad, with a proposed own funds. <
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CI August 2020 582.indd 9 18/08/2020 14:09:16 feature | covid and payments
covid accelerates card payments with major boost to contactless
The rising demand for non-cash payments will drive card payments at the point of sale, but around the world there are a number of interesting regional variations as a result of Covid-19, reports Douglas Blakey
hile there will be a rise The rising demand for non-cash payments of consumers using contactless cards. To in debit and credit card is expected to drive card payments at POS encourage the shift away from cash, the W transactions at the expense terminals, and will result in a decline in ATM contactless card payment limit was increased of cash, growth will be hampered by an cash withdrawals. This is particularly so in from A$100 ($70.30) to A$200 effective from overall decline in consumer spending due Australia, where the number of card payments April 2020. to Covid-19. is now forecast to grow by 3.6% in 2020. At GlobalData now expects the Australian To reflect this, CI has revised its forecasts the same time, there will be an 8.9% decline e-commerce market to grow at an annual rate for payment card transaction value and in ATM cash withdrawals. of 17.4% in 2020, compared to estimated volume for the next four years, anticipating a The growth in card payments will also growth of 10.2% had the Covid pandemic reduction in projected growth for 2020. This be driven by a rise in contactless payments. not occurred. will ultimately recover – but not to previously Australia is one of the most developed In the US, the number of card payments forecast levels. contactless card markets, with the majority will grow by 1.7% in 2020; at the same time
10 | August 2020 | Cards International
CI August 2020 582.indd 10 18/08/2020 14:09:16 feature | covid and payments
there will be a 4.3% decline in ATM cash withdrawals will increase by a meagre 0.1%. According to CI’s revised forecasts, the withdrawals. By complete contrast, revised figures for number of card payments in Malaysia will The US prepaid card market has benefited China are off the scale by comparison. grow by 8.5% in 2020, while ATM cash from the US government sending around withdrawals will rise by just 0.8%. At the four million American taxpayers their $1,200 China: 2020 e-commerce growth forecast same time, CI forecasts that the number of stimulus using Visa prepaid cards. The to hit 22.3% card payments in Singapore will grow by handouts are in addition to the 150 million CI now expects the Chinese e-commerce 4.2% in 2020, with a 5.1% decline in ATM remittances already sent out by the tax agency market to grow at an annual rate of 22.3% cash withdrawals. as part of economic impact payments. in 2020, compared to a previous estimate of Singapore is one of the world’s most highly 17.3%. developed contactless card markets, with the Covid to boost low US and Brazil The number of card payments is now majority of consumers already having access contactless usage forecast to grow by 11.8% in 2020, with to a contactless payment card. While the uptake of contactless card a sharp 15.6% decline in ATM cash payments in the US remains relatively slow withdrawals. While Chinese consumers have Singapore: Carry on with PayNow overall, the crisis ought to give also a push been hesitant about spending on big-ticket Citing the pandemic as an opportunity, the to these payments, since they also allow items, Alibaba’s sales grew by 22% in the Monetary Authority of Singapore and the consumers to avoid touching cash or PIN three months to March 31, mainly driven by Association of Banks in Singapore launched pads. The crisis has also accelerated digital demand for groceries and electronics. a campaign called Carry on with PayNow banking and payments transformation in the In Japan, companies such as Rakuten, to promote the PayNow P2P and person-to- US. Amazon and Yahoo Shopping have seen business digital instant payments service. According to a FIS survey published in monthly online sales increase since the As a part of the campaign, all individuals May, the Covid-19 crisis has rapidly altered outbreak of the pandemic. Collectively, the using PayNow to make payments to consumer banking and payments behaviour year-on-year sales of these three e-commerce businesses were eligible to win a cash prize in in the US. Nearly 16% of respondents said retailers registered increases of 107% in weekly draws between 13 April and 21 June they have significantly reduced the use of January, 113% in February and 114% in 2020. Similarly, cash rewards were offered to paper money, while 31% said they will use March. Card companies and online payment businesses that signed up for PayNow and contactless payments or mobile wallets instead solutions including Konbini, Amazon Pay and received payments between 9 April and 31 of cash and cheques. Furthermore, nearly PayPal will benefit from this scenario. July 2020. 40% will prefer to shop online in the future, In Japan, CI now forecasts that the number In contrast to the fumbling efforts of rather than in store. of card payments will grow by 2.6% in governments such as the US and Brazil to Brazil is another market with slow 2020, with a 5.5% decline in ATM cash defeat Covid, the South Korean government contactless growth pre-Covid; however, withdrawals. has controlled the pandemic well thanks according to Mastercard, the contactless to robust measures. A gradual recovery in payment volume in Brazil was four times Malaysia: CIMB, Maybank release new the local economy and a rise in consumer higher in March 2020 compared to March card products spending will be seen going forward. 2019. The use of online payment links The growing preference for digital shopping But even in South Korea, the pandemic will has also increased since the onset of the has resulted in leading Malaysian card issuers leave its mark on the cards sector. According pandemic. Domestic card scheme operator launching new products amid the Covid to CI’s revised forecasts, the number of card Cielo has recorded a sevenfold increase in crisis. In June, for example, CIMB Bank payments will grow by 3.8% in 2020, with a the use of payment links during quarantine launched the Visa-branded e Credit Card. The 7.3% decline in ATM cash withdrawals. compared to the pre-isolation period. card’s standout features include bonus points The use of mobile phones for purchases of for online spending and spending at strategic essential commodities will become even more Brazil launches national QR code partners, as well as auto-billing payments and widespread in South Korea, driving a faster- Brazil’s national QR code solution allows in-store contactless payments. than-expected rise in the use of mobile wallets consumers to pay for purchases via a link Also in June, Maybank rolled out a co- such as Samsung Pay, Naver Pay, KakaoPay sent by the merchant. Many online retailers branded credit card in partnership with online and Zero Pay. such as O Boticário, Ri Happy Brinquedos, retailer Shopee. The bank expects to issue As CI goes to print, India now has the and Santa Lolla also favour this payment 40,000 Visa Platinum Shopee credit cards third-highest number of Covid-19 cases in the method. During the pandemic, the country is within one year. world, behind the US and Brazil. advancing its payments industry. GlobalData’s 2019 Banking and Payments In March, the central bank launched the Survey found that 56.5% of consumers in India: double-digit drop in 2020 ATM cash national QR code standard, BR Code, in Malaysia currently use mobile wallets, and withdrawals order to enable interoperability of QR code this figure is likely to increase strongly given With consumers switching from in-store to payments. The adoption of BR Code will be the current situation. Malaysians are also online purchases in order to avoid exposing mandatory for all payment service providers increasingly using contactless cards. According themselves to disease vectors such as cash and in the country from September 2020. to the Mastercard Impact Study conducted in POS terminals, there has been a rise in online According to CI’s revised forecasts, the April 2020, 24% of consumers in Malaysia purchases. number of card payments in Brazil will stated that they were using contactless Leading e-commerce retailers Flipkart, grow by 2.9% in 2020, while ATM cash payments more frequently. Amazon, Bigbasket and Grofers have seen a
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CI August 2020 582.indd 11 18/08/2020 14:09:17 feature | covid and payments
20-30% increase in orders each month since in ATM cash withdrawals. According to registered travel booking cancellations of as the outbreak of the virus. Popular online the German Credit Agency, over half of high as 90%. payment tools such as Paytm, PayPal, Amazon card payments made are now contactless, Cash has historically been the preferred Pay, Visa Checkout and Masterpass – as compared to 35% before the pandemic. method of payment in Italy, and is at the well as online processors and gateways – will To encourage the shift away from cash, heart of the Italian economy, accounting benefit from this trend. contactless payment limits in several for 78.5% of the total payment transaction In India, CI now forecasts that the number European countries, including Germany, have volume in 2019; however, this is changing of card payments will grow by 5.5% in 2020, been raised. The new limit in Germany is €50 due to the outbreak. with a subsequent 11.7% decline in ATM ($56.14), up from €25. The Italian prepaid card market will benefit cash withdrawals. In Spain, cash has traditionally been a from the pandemic, as the Municipality of To offer secure payment transactions, popular payment instrument, accounting for Milan selected Mastercard branded Soldo’s on 1 May the Reserve Bank of India gave over 60% of the total transaction volume; prepaid card to distribute emergency aid permission to Visa, Mastercard and the however, according to a study carried out by to vulnerable citizens. Milan was the first National Payments Corporation of India digital-only bank N26, cash withdrawals in authority to adopt Soldo Care, and uses the – operator of the RuPay card scheme – to Spain fell by 68% in March 2020. cards to help distribute its share of the Italian enable contactless card payments at all retail According to CI’s revised forecasts, the government’s €400m solidarity fund. A stores. After due upgrades by banks and number of card payments in Spain will further 21 Italian authorities have signed up payment service providers, consumers can grow by 2.3% in 2020, with ATM cash to use the cards to distribute emergency aid in now make contactless payments in excess of withdrawals set to drop by 4.4%. their regions. INR2,000 ($28.05) without having to enter To promote online sales, CaixaBank According to CI’s revised forecasts, the a PIN. launched Social Commerce, a new online number of card payments in Italy will grow solution that enables merchants to sell by 2.2% in 2020, compared to a drop of Europe: Germany and Sweden in a league products on social networks including 3.6% in ATM cash withdrawals. of their own Facebook, Twitter, Instagram, WhatsApp and As in Italy, France is being hammered as With a relatively modest Covid death toll of Telegram. a result of a major loss of travel and tourism 9,000 by early August, Germany is the one revenue. According to Jean-Baptiste Lemoyne, major European country to have tackled the Covid crisis boosts prepaid use in Spain secretary of state for tourism, the French virus effectively, with just 110 deaths per one and Italy travel and tourism industry is estimated million residents. The pandemic is also pushing the use of to have lost around €10bn in the first four In the other major European markets, prepaid cards. For example, CaixaBank months of 2020. Paris alone has seen a 70% the corresponding figures are sobering. extended its partnership with the government drop in hotel bookings and a loss of 30% in Spain reports 29,000 deaths, or 612 deaths to distribute 200,000 social welfare prepaid revenue since the beginning of the crisis. per one million, just ahead of the UK with cards aimed at recipients who are struggling According to CI’s revised forecasts, the 42,000 deaths or 609 per one million. Italy to access benefits due to the current situation. number of card payments in France will grow and France, with 36,000 and 31,000 deaths In Italy, the pandemic has had a severe by 1.6% in 2020, with a simultaneous decline respectively, stand at 586 and 507 deaths per impact on the country’s tourism sector, which of 6.3% in ATM cash withdrawals. one million residents. accounts for around 13% of GDP. An even sharper drop in ATM withdrawals Germany does not escape revised forecasts According to the Italian tourism is forecast in the UK. The equivalent UK for the card sector post Covid, but the association, Assoturismo Confesercenti, figures are for card payments to grow by 1.7% revisions are modest. CI now forecasts that €200m worth of travel and accommodation in 2020, with a decline of 7.7% in ATM cash the number of German card payments will bookings were cancelled in March alone. Key withdrawals. grow by 3.3% in 2020, with a 2.9% decline tourist destinations such as Rome and Sicily Sweden: unique approach to pandemic Sweden’s softer lockdown approach and other government measures were able to reduce the pandemic’s impact, resulting in an anticipated gradual recovery in the second half of 2020. The economic revival will also benefit the payments industry. With over 5,500 deaths by early August and a mortality rate from Covid of around 550 deaths per 1 million residents, Sweden has fared no worse than Spain, Italy and the UK with their more severe lockdown measures. The counter argument, of course, will be the modest mortality rates in neighbouring Scandinavian countries. For example, Denmark has suffered only around 100 deaths per 1 million residents.
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CI August 2020 582.indd 12 18/08/2020 14:09:17 feature | covid and payments
CARD PAYMENT TRANSACTION VALUES
Forecasts pre and post Covid-19, 2019-23
Pre-covid forecasts Revised forecasts Pre-covid forecasts Revised forecasts Pre-covid forecasts Revised forecasts
Australia (A$bn) Brazil (BRLbn) China (CNYtrn) 2019 689.6 685.2 1,582 1,582 113.3 113.3 2020 736.2 698.0 1,724 1,630 130.6 121.4 2021 785.6 723.1 1,853 1,732 147.6 136.6 2022 838.2 761.3 1,992 1,828 162.4 151.4 2023 892.0 811.4 2,133 1,918 177.1 166.2 2019-23 CAGR 6.6% 4.3% 7.8% 4.9% 11.8% 10.0% France (€bn) Germany (€bn) India (INRbn) 2019 606.8 606.8 344.2 344.2 15.5 15.5 2020 646.1 609.2 371.2 351.5 19.4 17.2 2021 685.6 635.6 396.3 371.2 23.5 20.1 2022 723.1 661.5 419.9 390.8 28.1 23.0 2023 757.1 682.9 442.9 409.9 33.3 26.1 2019-23 CAGR 5.7% 3.0% 6.5% 4.5% 21.1% 13.3% Italy (€bn) Japan (JPYtrn) Malaysia (MYRbn) 2019 216.4 216.4 75.1 75.1 208.2 208.2 2020 232.9 220.1 82.1 76.7 234.4 215.9 2021 249.5 225.9 88.9 81.6 264.3 239.9 2022 265.9 234.4 95.2 86.5 298.1 266.1 2023 283.4 245.7 101.0 91.2 334.9 294.0 2019-23 CAGR 7.0% 3.2% 7.7% 5.0% 12.6% 9.0% South Korea (KRWtrn) Singapore (S$bn) Spain (€bn) 2019 916 916 111.9 111.9 209.8 209.8 2020 977 930 124.6 114.7 230.5 212.0 2021 1,041 980 136.3 123.2 248.3 219.9 2022 1,107 1,028 147.5 131.4 265.2 232.7 2023 1,172 1,078 158.0 139.4 280.9 248.8 2019-23 CAGR 6.4% 4.2% 9.0% 5.6% 7.6% 4.4% Sweden (SEKtrn) UK (£bn) US ($bn) 2019 1,126 1,126 841.5 841.5 7.24 6.95 2020 1,173 1,143 881.0 845.3 7.88 7.09 2021 1,211 1,190 923.8 866.2 8.54 7.41 2022 1,251 1,231 972.7 902.0 9.21 7.86 2023 1,298 1,268 1,024.6 948.4 9.91 8.42 2019-23 CAGR 3.6% 3.0% 5.0% 3.0% 8.1% 4.9% Source: GlobalData
Sweden leads the global race to become In order to discourage the use of credit for Contactless technology in Sweden is a cashless society, with cash accounting for online transactions amid rising debt and the already well established and being given a just 1.1% of the country’s overall payment ongoing pandemic, the Swedish government further boost by the pandemic. According transaction value in 2019. The current amended its Swedish Payment Services to Nets, 48% of the total card payments in situation is expected to further accelerate the Act. With effect from 1 July 2020, online the country were contactless at the beginning shift as consumers avoid cash as a potential merchants offering various payment options of April 2020, compared to 42% at the disease vector. are required to present non-debt payment beginning of the year. Moreover, Visa and The Covid-19 pandemic is also being seen methods, such as Swish, on the list first. Mastercard have increased their contactless to push the adoption of digital payments Merchants are also prohibited from card payment limits from SEK200 ($21.41) among Swedish merchants. Swish, a popular selecting invoice or instalment payment to SEK400. payment solution in Sweden, recorded options by default during the online checkout GlobalData now expects the Swedish increases in merchant transactions by 33.3% process. This move is likely to affect the e-commerce market to grow at an annual rate and 93% in terms of volume and value growth of buy-now-pay-later solutions of 19.3% in 2020, compared to a previous respectively in March. operating in the country, such as Klarna. pre-Covid estimate of 10.5%. <
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CI August 2020 582.indd 13 18/08/2020 14:09:17 feature | e-commerce fraud
e-commerce fraud: the beginning of a frightening new era
A daunting new age of mega-fraud is upon us. No longer content to inflict financial loss, the new breed of scams can cause fatal damage to a brand, drive customers away and force the target out of business. Mohamed Dabo reports
s business evolves, so too do the • Risk to customer satisfaction from and coupon and discount fraud – are methods used by those who seek to payment fraud has jumped by 62% very damaging to brands, and may drive A profit illegally from it. compared to 12 months ago – the biggest consumers to take their business elsewhere. For every new tactic that companies adopt increase of any risk factor that respondents “The bad guys are moving further back to combat fraud, there are countless bad guys were asked to rate. Corporate reputation is in the chain. They’re not just attacking at exploring new ways to wreak havoc, often next highest, with an increase of 60%; checkout, they’re trying to get into your with ramifications that go far beyond the • Asked to rate their companies’ overall accounts,” says Andrew Mortland, VP of balance sheet. vulnerability, 41% of respondents say they Product at Accertify. A study by SourceMedia Research and feel just as or more vulnerable to fraud The reason is that fraudsters have moved PaymentsSource conducted on behalf of than they did 12 months ago; beyond making fraudulent payments and are Accertify, a wholly owned subsidiary of • Non-traditional fraud is on the rise, with now fixated on the enormous financial value American Express, shows that while credit identity theft and gift card fraud seeing the locked up in consumer accounts, including card fraud and financial loss remain key issues biggest jumps, having increased by 44%, loyalty points, rewards, stored payment to contend with, a new era has begun in terms followed by coupon, discount or refund methods, gift cards and coupons. of fraud. abuse at 40%. Data from the study shows that some Businesses in all industries are more focused companies are aware of this shift and the need than ever on creating frictionless, customised The Accertify report takes a look at to evolve fraud-fighting tactics. Asked which experiences for clients that are both simplified these and other pressing trends, how three types of fraud have increased the most and more secure. companies are coping, and what they can at their company over the past 12 months, The research reveals why: the survey of do to further fraud-proof their businesses respondents cite identity theft (26%), employees at airlines, casinos and gaming while simultaneously improving customer coupon/discount/refund abuse (25%) and gift companies, and retailers shows that what experience. card fraud (22%). These businesses are also companies fear most from fraud is no longer aware of the need to be vigilant as attacks are purely financial loss, but customer attrition Fraud through the eyes of today’s expected to increase. and damage to corporate reputation. businesses “It’s a very complex, ever-changing space” The research points to a number of key Fraud is not what it used to be. The latest Mortland says. “So, the problems you’ll see statistics that illustrate this point: attacks – account takeovers, data breaches, this year probably won’t be the same next year,
14 | August 2020 | Cards International
CI August 2020 582.indd 14 18/08/2020 14:09:19 feature | e-commerce fraud
and many of the new attacks are very different key research findings than what we saw five years ago.” While fraud prevention has traditionally Impacts of payments fraud been an exercise in saving money, it is morphing into one of saving face. This is Customer satisfaction 34% 28% 21% 10% 6% evident in the data, which points to customer Corporate regulation 29% 31% 24% 9% 6% satisfaction and corporate reputation as the greatest pain points for companies when it Regulatory actions 20% 31% 29% 11% 7% comes to fraud. Meanwhile, financial losses, Financial losses 11% 21% 20% 28% 19% traditionally a top concern, ranked fourth. Productivity losses 10% 19% 28% 25% 18% “Now, if I get a hold of your account and I Customer losses 8% 18% 27% 27% 19% drain your loyalty points, or I ship a bunch of goods to an address you don’t know, you don’t Significantly Increased Not Decreased Significantly feel safe doing business with that company,” increased somewhat changed somewhat decreased Mortland says. “You might decide you’re going to take your business elsewhere. From a corporate Types of fraud experienced reputation perspective, whether it’s a data breach, people’s accounts being taken over or Identity theft 44% it took me two weeks to set things right with Gift card fraud 44% my airline, those are big problems that are Coupon/discount/refund abuse 40% Card testing 31% different than just a financial loss.” New account recreation 30% One consistent trend is that the internet Friendly fraud 25% continues to be the avenue of choice for Account takeover 22% fraudsters, accounting for 35% of total Affiliate fraud 18% financial losses companies experienced in Botnets 18% the past 12 months. Also a risk, but less so, Clean fraud 16% Reshipping 15% are: mobile (19%), call centers (16%), kiosks Other 4% (14%) and chat support (11%).
Payment fraud channel origination Source: SourceMedia Research, PaymentsSource A crucial change is that today’s fraudsters do more than just steal credit card numbers. In which users to trust and which to turn away monitoring over the next 12 months, among terms of fraud types, those related to identity by taking advantage of modern fraud- other investments planned. theft (44%), gift cards (44%) and coupon/ fighting technology: machine learning, user Given the somewhat cat-and-mouse nature discounts/refunds abuse (40%) are the most behavioural analytics and device intelligence.” of fraudulent attacks and their prevention, prevalent. The survey data shows that companies as one survey respondent notes, it stands to “It’s rather easy for a bad guy just to go set are on the right track. Account transaction reason that companies see an ongoing need up fake account after fake account after fake monitoring is the most used fraud-prevention for investments in anti-fraud solutions. account for certain types of abuse,” Mortland solution, used by 53% of respondents. Digital “If you don’t watch what is happening at says. In so doing, fraudsters can take identity verification (45%), device intelligence the front door, it’s much more difficult to advantage of promotional offers and discount (42%), user behaviour analytics (37%), detect the problems once somebody’s in,” codes that many companies offer. multi-factor authentication (36%) and Mortland says. “When I look across different “Fraud of this type often flies under the machine-learning technology (36%) are also kinds of industries, there’s a rather simple radar because what the bad guys are doing in play, but should be even more so, Mortland message: pay attention to what’s happening is not typically viewed as a high-risk event,” contends. on your site, not just at the checkout.” Mortland says. “No money is changing hands, “There’s no silver bullet. There’s no one way Be vigilant when customers are setting up somebody is just setting up an account. But to stop bad guys and take good care of your accounts and logging in, and when changing actually, there are some big risks there for customers, so what you want is an approach personal information such as shipping merchants.” For this reason, it is imperative that is multifaceted,” Mortland says. addresses or passwords. that companies take a more holistic approach In terms of what they think is working best “It’s just really a message about early to fighting fraud. to prevent fraud, respondents see account warning,” Mortland says. The most effective way of solving these monitoring and fraud detection, digital Ultimately, one thing is clear from new types of attack is to regularly assess a identity-verification solutions and device the research: the issue of payments fraud user’s actions and behaviours beyond just the intelligence as the top three, with strategies will continue to be relevant to industry transactions being made. such as multi-factor analysis not far behind. professionals. “Businesses should be alert to all account- Companies are also putting their Staying abreast of the latest developments, related interactions, watching for sudden money where their mouth is, with 48% ideally with the help of an industry partner, changes or anomalies,” Mortland says. “Learn of respondents planning to increase fraud will remain key to success. <
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CI August 2020 582.indd 15 18/08/2020 14:09:19 country snapshot | chile
CHILE
country snapshot: chile Credit cards gradually gain traction
ash remains the preferred method However, payment card transactions efforts and infrastructure modernisation. of consumer payment in Chile, are gradually replacing cash in Chile, The government’s drive to provide basic Caccounting for 62.5% of the total mainly as a result of government and banking and financial services has helped payment transaction volume in 2020. bank initiatives such as financial inclusion much of the population to become banked,
value of credit transfers value of payment cards value of cheque payments
bn bn bn 8,000 120 500
7,000 100 400 ,000 80 5,000 00
4,000 0
200 ,000 40 2,000 100 20 1,000
0 0 0
201 201 2019 201 2019 2019 2020e 2024f 2020e 2024f 2020e 2024f
Source: SBIF, GlobalData Source: SBIF, GlobalData Source: SBIF, GlobalData
16 | August 2020 | Cards International
CI August 2020 582.indd 16 18/08/2020 14:09:21 country snapshot | chile
with the percentage of individuals aged Debit card shares by issuer Debit card shares by scheme over 15 with an account growing from 70.7% in 2016 to 81.6% in 2020. The frequency of payment card use in Chile stands at 70.5 – the highest among thers regional peers Brazil, Argentina, Mexico, 2 . % Colombia and Peru. Changing lifestyles and Mastercard 9.8% rises in the economically active population, Banco del Estado edcompra de Chile 49.1% 100% disposable income and the popularity of antander online shopping supported the growth of 12.2% payment cards during the period 2016-20. Banco The recent outbreak of Covid-19 is de Chile 12.4% affecting consumer spending and the payments industry. Chile has so far seen over 180,000 confirmed cases, with around
3,383 lives lost. Source: GlobalData Source: GlobalData
DEBIT CARDS PREFERRED pay later shares by issuer pay later shares by scheme
Debit cards remain the preferred type of payment card, accounting for 78.1% of thers total payment card transaction volume in . % 2020. The high adoption of debit cards is antander 22.9% mainly supported by government initiatives to increase financial inclusion. isa thers 7.8% Banks are offering low-cost accounts 52. % Mastercard Banco de Chile 58. % to bring more of the population into the 15. % formal banking system. For example, BancoEstado offers the CuentaRUT savings Banco ipley account to individuals who do not qualify 8.9% for conventional current accounts. The account is offered with no maintenance fees and includes a Redcompra debit card. Source: GlobalData Source: GlobalData According to BancoEstado, there were around 12 million CuentaRUT clients at the end of 2019. On 21 March, Banco Santander POS TERMINALS announced relief measures that enable BUNDLED CARD OFFERS credit card holders to spread outstanding The number of POS terminals rose from balances over between three and 24 187,197 in 2016 to 242,787 in 2020, While credit card penetration stands at 0.7 instalments. indicating that Chilean consumers are cards per inhabitant, demand has gradually increasingly inclined to use payment cards risen, mainly due to increased short-term E-COMMERCE GROWTH for in-store transactions. credit demand among the lower-and Banks are, as a result, launching new POS middle-class populations. The e-commerce transaction value in terminals to meet this growing demand; in Bundled card packages, discounts, Chile grew from CLP2.1trn ($2.8bn) in December 2019, for example, Santander rewards and instalment payment facilities 2016 to $6.7bn in 2020, at a CAGR of launched the Getnet POS payment have helped drive credit card adoption 24.4%, supported by rising internet and terminal in Chile. and use in Chile. To boost demand further, smartphone penetration. Annual online As merchants increasingly recognise the Chilean banks offer virtual credit cards. festivals are also contributing to this benefits of switching from traditional POS The market registered strong growth growth. terminals to options with more features in terms of both payment volume and The Santiago Chamber of Commerce and greater mobility, the uptake of mobile value over the four years to 2020, with organises the Cyber Monday shopping POS terminals is increasing. respective CAGRs of 17.0% and 15.2%. event in Chile every year. In 2019, Cyber In May 2019, BancoEstado launched As a result of Covid-19, and to avoid Monday recorded sales worth $271m Compraquí, a mobile POS solution payment defaults leading to non- from around two million transactions – that enables merchants to accept card performing assets, banks in Chile are representing 16% growth compared to payments in Chile. The Compraquí platform extending various relief measures to 2018. Meanwhile, Black Friday – which is is a result of a partnership between customers on credit cards and other loan already popular in countries such as the US BancoEstado and electronic payment repayments. and the UK – is gaining popularity in Chile. solutions provider SumUp. <
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CI August 2020 582.indd 17 18/08/2020 14:09:21 country snapshot | russia
RUSSIA
country snapshot: russia Mir disrupts debit card sector
he Russian payment card market overall transaction value. Consumers The introduction of the national is evolving at a rapid pace, and are enthusiastically embracing new payments scheme, Mir, in December Trecorded a strong CAGR of 22.7% technologies, and increasingly prefer card 2015, provided a much-needed push between 2015 and 2019 in terms of payments for low-value transactions. to the overall payment cards market. The relatively low interchange fees value of credit transfers value of payment cards charged on Mir cards, coupled with loyalty programmes associated with card trn trn 12.0 2.0 transactions, are driving its use in Russia. Meanwhile, financial inclusion initiatives 10.0 and improvements to the banking 1.5 infrastructure also contributed to growth 8.0 in the Russian payment cards market. Debit cards dominated the overall payment card .0 1.0 space, accounting for 95.5% of the total card payments value in 2019; the rising 4.0 0.5 banked population and a general consumer 2.0 preference for debit cards over credit cards drove this increase. 0 0 A growing e-commerce market, the
2015 2015 2018 adoption of alternative payments, 2018 2019e 202 f 2019e 202 f improvements to the payments Source: Central Bank of Russia, BIS, GlobalData Source: Central Bank of Russia, BIS, GlobalData infrastructure and the growing popularity
18 | August 2020 | Cards International
CI August 2020 582.indd 18 18/08/2020 14:09:23 country snapshot | russia
of contactless payments will further drive Debit card shares by issuer Debit card shares by scheme electronic payments in Russia. MASTERCARD AND VISA While international scheme providers Mastercard and Visa continue to dominate thers thers the Russian debit card market, they are 1.1% 28. % Mastercard 8.5% now experiencing declines in their shares berbank owing to the rising adoption of Mir cards. 51.5%
Mir was introduced in December 2015, TP Bank and by December 2018, a total of 322 4.5% TB isa banks had joined the system, with 160 12.9% 2.9% banks issuing these cards. Mir has also developed a strong acceptance network in Russia. As of
November 2019, Mir cards were accepted Source: GlobalData Source: GlobalData by the device networks of 300 Russian banks, including over 130,000 ATMs and pay later shares by issuer pay later shares by scheme 27 million POS terminals. To enable payments globally, Mir offers co-badged cards in partnership with international schemes UnionPay, JCB and thers 12.5% Mastercard. berbank thers 0.1% CREDIT CARDS 7.5% Mastercard Credit card penetration remains low, 48.9% with just 26.2 cards per 100 individuals isa 8. % in 2019; this is mostly a result of banks’ Tinkoff Bank conservative credit policies. TB 21.1% 11. % The introduction of the debt burden indicator (DBI) in October 2019 has led banks to carry out more thorough assessments of borrowers, and only offer Source: GlobalData Source: GlobalData credit cards to consumers with low debt burdens and high credit ratings. Following the introduction of DBI, the The availability of alternative payment CONTACTLESS AND MPOS number of new credit cards issued during solutions such as Apple Pay, Google Pay, October-December 2019 decreased by PayPal and Samsung Pay will further drive The number of POS terminals in Russia 16% as compared with the same period e-commerce growth. recorded a CAGR of 18.9% between 2015 in 2018; however, the market registered and 2019. significant growth in terms of card SEGMENTATION Post Bank, for instance, is in the process payments, with banks offering instalment The prepaid cards market is increasingly of equipping all its post offices with POS payment facilities and pricing benefits. gaining traction in Russia, with the number terminals. By September 2019, the bank of prepaid cards in circulation increasing at had installed 54,000 POS terminals E-COMMERCE GROWTH a high CAGR of 16.9% during 2015-19. in 37,000 post offices across Russia. The e-commerce transaction value grew Banks offer customised prepaid cards Cardholders of any bank can use the from RUB1.4trn ($19.7bn) in 2015 to targeted at various consumer segments. terminals to withdraw cash, deposit funds $34.4bn in 2019, and is expected to For instance, Pochta Bank offers the Visa and pay for postal services. increase further at a CAGR of 10.0%. Rising virtual card for online shoppers, which To further push POS adoption among consumer confidence in online purchases, includes an online shopping package with individual entrepreneurs and SMEs, coupled with an increasing number of benefits such as price guarantees, free Promsvyazbank started selling POS merchants entering this space, drove this returns and free repairs for damaged machines at its bank branches from growth. products. September 2019. Cross-border e-commerce is a growing To meet the needs of younger In addition to conventional POS phenomenon in Russia. According to the consumers, Ak Bars Bank offers the terminals, adoption of mobile POS (mPOS) central bank, Russian consumers spent Mastercard Schoolboy card for students in solutions is also growing among Russian $9.7bn in foreign online shops in 2018. grades 1-11. The card can be used to make merchants. LifePay, SumUp, iPay and Ibox China accounts for the majority of cross- payments at schools, and for shopping and are examples of companies offering mPOS border purchases. travel purchases. terminals in Russia. <
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CI August 2020 582.indd 19 18/08/2020 14:09:24 Country snapshot | south africa
SOUTH AFRICA
country snapshot: south africa Credit card growth accelerates
outh Africa is a cash-dominated However, use of payment cards in availability of basic bank accounts, and economy, with cash accounting South Africa is growing at a healthy pace, reduced interchange fees. Sfor 63.1% of the overall payment supported by a growing banked population In addition, the gradual migration of low- transaction volume in 2019. due to financial inclusion programs, the value cash payments to cards has resulted
value of credit transfers value of payment cards value of cheque payments trn bn bn 2.5 150 25
2.0 120 20
1.5 90 15
1.0 0 10
0.5 0 5
0 0 0
2015 2018 2015 2015 2018 2019e 202 f 2018 2019e 202 f 2019e 202 f
Source: BIS, GlobalData Source: BIS, GlobalData Source: BIS, GlobalData
20 | August 2020 | Cards International
CI August 2020 582.indd 20 18/08/2020 14:09:26 Country snapshot | the philippines
in cards being used to make payments, Debit card shares by issuer Debit card shares by scheme rather than withdraw cash from ATMs. Debit cards dominate the overall card payment space, accounting for 63.3% of the total card payment value in 2019. Credit and charge cards account for a much Absa Bank thers 2 .1% smaller proportion of payment cards in .5% circulation, although the frequency of use Mastercard isa per card per year is higher for debit cards. 48.5% 51. % Credit and charge cards are mainly used tandard Bank 22.8% for medium- to high-value payments. A Capitec Bank growing e-commerce market, the adoption 20. % of alternative payment methods, the introduction of mobile-only banks and the rising popularity of contactless payments
will further drive the shift towards Source: GlobalData Source: GlobalData electronic payments in the country. DEBIT CARDS DOMINATE pay later shares by issuer pay later shares by scheme Debit card penetration in South Africa is the highest among its peers, supported by a thers .4% rising banked population. The rise in payment card use can be tandard thers Bank attributed to efforts by the government 29.0% 24. % and banks. The emergence of digital-only isa banks and the adoption of contactless 4 .9% Mastercard technology are expected to accelerate the 4 .7% shift towards electronic payments in South Absa Bank F B 2 .8% Africa. 22.9% An increasing banked population through financial inclusion programmes, combined with the continued migration of low-value cash payments to debit cards, has resulted Source: GlobalData Source: GlobalData in debit cards being used to make payments as opposed to cash withdrawals. increasing consumer confidence in online To drive awareness, the South African CREDIT CARDS transactions. Banking Risk Information Centre is South Africa’s credit card market is one of Online shopping festivals such as Black focusing on increasing consumer the fastest-growing in the region, following Friday and Cyber Monday are popular awareness through a series of question- decades of limited access to credit in South Africa, and are also aiding the and-answer drives, and urging holders to facilities. Consequently, millions of people – growth of e-commerce. Meanwhile, use contactless cards without fear of fraud. especially among the middle classes – have the availability of alternative payments become an available and attractive market solutions such as PayPal, Masterpass, Visa LOW-COST POS TERMINALS for financial institutions. Checkout and SnapScan will further drive The South African POS terminal sector Reward programmes, cashback, the e-commerce market. is undergoing changes, supported by the discounts and instalment facilities offered increasing popularity and adoption of on credit card purchases are also driving CONTACTLESS mobile POS (mPOS) terminals. the use of credit cards. However, the latest Contactless card holding is high in South In October 2017, South African payment amendment on the National Credit Act Africa, with all major banks now offering company Yoco introduced an mPOS (NCA), allowing the partial or full waiver contactless cards. According to the solution in collaboration with Mastercard of card debt, is expected to force banks to Payments Association of South Africa that enables SMEs to accept card limit credit lending to low-income groups. (PASA), there were 9.9 contactless debit payments. The company rolled out over cards and 2.3 contactless credit cards in the 15,000 mPOS terminals during its launch. E-COMMERCE GROWTH country as of December 2018. Similarly, payment solutions provider South Africa’s e-commerce market more Merchants are also increasingly installing Paycorp launched the ZipZap mPOS than doubled from ZAR18.2bn ($1.3bn) contactless POS terminals. Overall, there terminal in November 2016. The device is in 2015 to $3.7bn in 2019, at a CAGR of were 253,000 contactless-enabled POS offered free to merchants whose monthly 30.8%. This was due to rising internet and terminals as of December 2018, according Visa and Mastercard transactions exceed smartphone penetration, coupled with to the PASA. $1,737.89. <
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CI August 2020 582.indd 21 18/08/2020 14:09:27 analysis | rsb and amex PRIVATE BANKER
HEAR • NETWORK • DISCOVER • CELEBRATE as russian standard Private Banking and Wealth Management: faces the music, Switzerland 2020 Conference and Awards will amex cut its ties? Zurich • 10 December 2020 Verdict is delighted to announce the fifth edition of Private Banking & Wealth Management Earlier this year, Russian Standard Bank (RSB) hit the headlines for the Switzerland 2020. We are delighted to confirm that we will be returning to Zurich, bringing wrong reasons. In April, owner Roustam Tariko was accused of defaulting on together the Swiss private banking sector for one day of shared insight and networking. Eurobonds for a second time. What does this mean for the bank’s reputation? Drawing on Verdict’s analysis and business intelligence, this event offers a unique arena to Evie Rusman speaks to Alexey Sanaev, chief financial analyst at Finam discover the trends and opportunities driving market growth. The event will feature a daytime conference including targeted sessions, interactive debates and workshops, followed by a black-tie s a result of Tariko’s actions, empowering, provides personal recognition Sanaev continues: “Back in the early 2000s, gala awards dinner celebrating the best in private banking and wealth management in Switzerland. international bondholders are through world-class customer service, and for American Express it was important to A planning to claim the 49% stake delivers benefits uniquely designed to meet establish a good presence in the Russian We look forward to welcoming you. in Russian Standard that was placed as their lifestyle and travel needs”. market, but now the market is no longer collateral on the loan. Speaking on the alliance, Sanaev says: growing. In addition, Amex’s exclusive partner The conflict began in 2017 when Tariko, “Russian Standard Bank was the first – and is suffering in terms of its reputation, so I am who is also founder of Russian Standard is still the only – bank to issue American not sure if Amex will continue to operate with Vodka, defaulted on a Eurobond payment, Express cards in Russia. So, it is also the RSB. It isn’t a question of the reputation of amounting to more than $400m. So, what exclusive acquirer of Amex-branded credit Amex in Russia, but the reputation of Amex is the latest? Speaking to CI, Finam’s Alexey cards. When the two companies first in the US and globally that may be affected Sanaev discusses what actions are likely to collaborated, the market was booming by activities of its Russian partner.” unfold in the coming months. He says: and consumer spending was growing. This “What will most likely happen is that the FUTURE OF AMEX IN RUSSIA international bondholders will become the There is now much speculation about the primary shareholders of the bank. future of the longstanding alliance. Will “Obviously, this would support the Amex exit the market? Will the company reputation of the bank because there would be choose to cut ties with RSB and find another international capital there. There would also acquirer to collaborate with? Sanaev argues be renowned investors to help make sure that The most likely that the latter is the most obvious choice. the corporate governance of the bank works “The most likely scenario is that Amex will in transparent patterns and that it works scenario is that choose a different partner in Russia, one with smoothly.” a cleaner reputation. I think that is an obvious He adds: “Ultimately, it would help to Amex will choose a thing to do,” he says. “The company is no make sure the bank’s reputation continues to longer gaining from the partnership with grow in a positive direction. The bad thing is different partner Russian Standard Bank – financially and in that if the transactions are what they appear terms of reputation.” to be, then it would put the reputation of He continues: “I believe Amex should Tariko at significant risk. He may become maintain its presence in the market, because labelled as a fraudster, which is a bad story.” was fuelled by consumer loans, and RSB it is still a significant market where a lot of Gold Partners Silver Partners issued consumer loans that were available to international corporates send their employees. AMEX AND RSB everyone. These employees are all used to using Amex Payments giant American Express also finds “The bank was a pioneer and one of the products, and they want to continue with this itself involved in the squabble, as it has been greatest beneficiaries of this market; therefore, level of service.” a partner of RSB since the early 2000s. It I don’t think it is a surprise that American Sanaev also highlights how the Russian was in 2005 that Amex first released its credit Express chose RSB as its exclusive partner. market is significant in demonstrating Amex’s Bronze Partners Network Partner cards in the country, with the help of RSB. Back then it was the right thing to do, and global reach. He adds: “In my opinion, Russia At the time, the two companies said the a good name in the prospective market for is probably not an important market for cards were “designed to meet the needs of Amex to be associated with. But the question Amex in terms of financial results; however, it a wide range of Russian consumers who remains as to whether that is the right thing is an important market in terms showing the seek a financial product that is financially to do now.” company has good global coverage.” < To register now, or for more information, contact Ray Giddings at 22 | August 2020 | Cards International [email protected] or call +44 (0)20 3096 2585
CI August 2020 582.indd 22 18/08/2020 14:09:27 PRIVATE BANKER
HEAR • NETWORK • DISCOVER • CELEBRATE Private Banking and Wealth Management: Switzerland 2020 Conference and Awards Zurich • 10 December 2020
Verdict is delighted to announce the fifth edition of Private Banking & Wealth Management Switzerland 2020. We are delighted to confirm that we will be returning to Zurich, bringing together the Swiss private banking sector for one day of shared insight and networking. Drawing on Verdict’s analysis and business intelligence, this event offers a unique arena to discover the trends and opportunities driving market growth. The event will feature a daytime conference including targeted sessions, interactive debates and workshops, followed by a black-tie gala awards dinner celebrating the best in private banking and wealth management in Switzerland. We look forward to welcoming you.
Gold Partners Silver Partners
Bronze Partners Network Partner
To register now, or for more information, contact Ray Giddings at [email protected] or call +44 (0)20 3096 2585
CI August 2020 582.indd 23 18/08/2020 14:09:27 Banking & Payments at a glance
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markets competitors How fast will the market What are your competitors evolve? Which segments doing differently? offer the greatest potential? How successful are they?
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