Savantor MarketEye: May 17 – 30 2008

Savantor Limited 68 Lombard St London EC3V 9LJ This is a confidential, high-level industry news and business intelligence Tel: 0870 734 6250 Fax: 0870 734 6251 update bulletin. For further information on any of the items contained email: [email protected] within the bulletin or to discuss the potential impact of these items on www.savantor.com your business, please contact Savantor on our dedicated support centre e-mail address ([email protected]). Click on the links below to see back copies of MarketEye or view Savantor Resourcing services

Items in this issue: Savantor’s Views...... 1 MasterCard trials PayPass in Canada ...... 3 Mobile banking and payment users to reach 900m in Products and Initiatives...... 2 2012...... 3 Moneybookers launches payments application on Outsourcing, Acquisitions and Deals...... 4 Facebook ...... 2 of America and Wells Fargo in payment ING Direct offers US customers free anti-fraud software.2 processing JV...... 4 UK's Faster Payments service goes live...... 2 First Data takes stake in Eufiserv processing unit...... 4 Market News and Views...... 2 ING and Atos Origin partner on Sepa payments UK consumers shunning m-payments ...... 2 services ...... 4 Top Post Codes for ID Fraud ...... 3 Market News and Views – Digital Money...... 3

Savantor’s Views In a dramatically titled ‘Victims of ID Fraud’ report Experian shows that the number of identity fraud incidents reported to Experian has continued to grow during the second half of 2007. Between 1 July and 31 December 2007, 3,554 new victims of identity fraud contacted Experian’s Victims of Fraud service to get help reclaiming their identities which contrasts with the 3,500 cases reported during the whole of 2006. In the second half of 2007, 71% of victims first discovered they had become a victim by monitoring their credit report and seeing fraudulent activity recorded on it. Experian’s report reveals that the typical identity fraud victim will be aged between 26 and 45. They will work in professional occupations, own their own (often detached) home and will be high income earners. In fact, those earning more than £50,000 a year are almost three times more likely than average to fall victim to identity fraud. Forwarding address fraud, where a fraudster redirects the victim’s post to a drop address that he/she then visits to collect mail, continues to grow and is now the most commonly perpetrated method, representing 36% of identity fraud committed. Present address fraud, previously the most common method, declined to 30% from 46%. London remains the identity fraud capital of the UK, with residents – on average – almost twice as likely to fall victim compared with the average score across the UK. Kensington is London’s the identity fraud hotspot, with residents – on average – three-and-a-half times more likely to fall victim compared with the UK average. Residents of Richmond-upon-Thames, Putney, Wimbledon and the Kings Road area of Chelsea are also amongst those at the highest risk – being over three-times more likely to fall victim. So the perhaps unsurprising conclusion is that high income earners living in expensive parts of London are more likely to suffer from id fraud. Surely it would not be difficult to eliminate this if Experian were to send an sms message to anyone who claims to be opening an account, applying for a card or a loan against a name where those products already exist. After all we don’t do those things so frequently that being asked if it was really you would be a problem. Why not get customers to pay for a proactive service rather than the reactive service of paying to check your credit record.

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Products and Initiatives

Moneybookers launches payments application on Facebook Moneybookers has launched a Facebook application that enables account holders to send and receive money via their profile on the social networking site. Moneybookers believes that whilst online micro payments have become increasingly popular, some consumers are put off by the fees that third party payment services charge. Also, the recent explosion in identity theft has left many people concerned about providing personal information and credit card details over the Internet. The company is also pitching the application as a "low cost fundraising" tool that enables accountholders to raise sponsorship money or charitable donations, collect debts and request participation fees. (Source date: 17th May, 2008)

ING Direct offers US customers free anti-fraud software ING Direct is offering US customers free anti-phishing software from Trusteer. The online bank is offering the Rapport application - which is designed to protect against phishing, pharming, keylogging, session hijacking, man in the middle and man in the browser attacks - as a free download from its site. Trusteer says Rapport protects logins and transactions from fraudsters, even if a computer is infected with malware. The system works on the assumption that the customer's computer is already infected and builds a "secure pipe" to hide credentials and communication with the bank's site. Malware or any other form of attack cannot penetrate the secure pipe and cannot interfere with online banking activities, says Trusteer. (Source date: 23rd May, 2008)

UK's Faster Payments service goes live The UK's faster payments service, designed to provide customers with near real-time transfer of phone, Internet and standing order payment instructions has gone live. Not all the founding are providing the service to customers at launch. Customers of , Citi, Clydesdale and Yorkshire Banks, HSBC, Lloyds TSB, Northern Bank and RBS are able to use the system to send and receive payments. But customers of Alliance and Leicester, HBOS, Nationwide, and will only be able to receive payments to begin with. The Co-operative Bank is not set to offer the service for another six weeks, while Abbey will also be late in offering the service. As part of the phased rollout, some banks are placing lower initial limits on the value of payments that can be sent or may be choosing to phase rollout across their customer accounts. Standing orders are not scheduled to start being processed through the faster payments service until 6 June. The new infrastructure will eventually process Internet and phone payments of up to £10,000 and standing orders of up to £100,000. APACS says there were 27.5 million Internet or telephone banking users in 2007 and this is expected to rise to 40.9 million by 2017. Last year there were 124.5 million Internet and phone payments and 347.3 million standing order payments. In ten years these numbers are forecast to rise to over 300 million and 422.3 million respectively. (Source date: 27th May, 2008)

Market News and Views

UK consumers shunning m-payments Just 1% of UK adults use their mobile phones to conduct banking, bill payments or shopping transactions, according to research commissioned by Unisys which found that 80% are not even interested in using m-payments services. The survey of 978 UK adults by International Communications Research found that only 12% of UK adults would consider using their handset for online transactions. 73% of respondents said they would not consider using their handset for online transactions, while 7% said they would not use a mobile device at all for anything. Security concerns were found to be a major hindrance to take-up of mobile services, with just 5% considering mobile handsets offer a "very secure modality". 23% think mobiles are "somewhat secure", while 32% think mobiles are "not very secure". Around 24% felt mobiles were "not secure at all". 52% said banks provide the best security for mobile transactions, compared to just 7% that said online retailers. Around 7% also cited Telcos as having the best security. However, 15% say no organisation has good enough security.

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Identity theft is still a major concern for UK Consumers, with 86% worried about unauthorised access to or misuse of personal information. Misuse of credit and debit card information is a concern for 84% of respondents. (Source date: 21st May, 2008)

Top Post Codes for ID Fraud London residents are far more likely to have their identity stolen than anyone else in the UK, according to a former vice president of Mastercard. Peter Warner revealed that 19 out of the top 20 areas for identity theft are within Greater London. Maidenhead in Berkshire is the only area outside London to figure in the Top 20: it came in fourth. The full list of the top postcodes affected by identity theft is: 1 SE16 (Greenwich) 2 CR0 (Croydon) 3 IG11 (Barking) 4 SL6 (Maidenhead) 5 SE13 (Lewisham) 6 E6 (Newham) 7 SW11 (Battersea) 8 E17 (Walthamstow) 9 N14 (Southgate) 10 N4 (Stoke Newington & Harringay) 11 N16 (Stoke Newington) 12 E11 (Leyton & Wanstead) 13 NW2 (Cricklewood & Willesden) 14 BR3 (Beckenham) 15 HA3 (Wealdstone) 16 SW18 (Wandsworth) 17 E2 (Bethnal Green) 18 NW10 (Willesden & Harlesden) 19 NW3 (Hampstead) 20 N22 (Wood Green) (Source date: 26th May, 2008)

Market News and Views – Digital Money

MasterCard trials PayPass in Canada MasterCard has teamed with Bell Mobility to launch a four month closed pilot of its contactless mobile payment technology in Canada. MasterCard Canada says it will use the pilot to test the system's security and over-the-air provisioning of card credentials. The PayPass payment application can be password protected so that a lost or stolen handset cannot be used to make payments. MasterCard in confident that the trials will be a success. The card network says a 2007 survey found nearly nine in ten Canadians (88%) are "very interested" in a payment method that would cut the time it takes to complete transactions. (Source date: 9th May, 2008)

Mobile banking and payment users to reach 900m in 2012 New research shows that combined forecasts for users of contactless mobile payments, mobile banking and over the air (OTA) transactions will reach 884 million in 2012. This is the cumulative number of users expected to adopt new technologies, platforms and services, according to a new report by IMS Research which found that these users are expected to complete a total 62 billion transactions between them in 2012. The report shows that mobile penetration in many developing markets is far higher than that of banking or fixed line infrastructure, meaning that mobile is often the only means of access available. This contrasts strongly with more developed markets where mobile is an alternative but th personalised means of access. (Source date: 30 May, 2008)

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Outsourcing, Acquisitions and Deals

Bank of America and Wells Fargo in payment processing JV Bank of America and Wells Fargo are establishing a joint venture called Pariter Solutions that will combine their respective payment processing systems to create a single, combined automated clearing house (ACH). Financial terms of the deal were not disclosed. The venture will have offices in San Francisco and North Carolina. Payment processing operations are expected to begin in late 2009. (Source date: 16th May, 2008)

First Data takes stake in Eufiserv processing unit First Data is acquiring a 50% equity stake in the interbank processing unit of Eufiserv. Brussels-based Eufiserv is owned by savings banks from nine countries and by the European Savings Banks Group (ESBG). It provides inter-bank switching of PoS and ATM transactions, including authorisation, clearing, settlement and value-added services to payment card issuers, acquirers and schemes. Eufiserv spun off its card scheme into a separate company in 2006 to become compliant with the Sepa Cards Framework. Previously the ATM card service, now called Eufiserv Payments SCRL, was packaged with its payments processing services. (Source date: 21st May, 2008)

ING and Atos Origin partner on Sepa payments services ING and Atos Origin are teaming up to provide Sepa-compliant payment processing services to banks and corporations in Europe. Under the deal Atos Origin will provide business and technology services, while ING will deliver payment processing services compliant with the latest EU regulations. Atos Origin says the services will help firms comply with Sepa and the EC's Payment Services Directive (PSD), without having to re-engineer their underlying IT systems. For corporations the offering includes the establishment of a single, centralised in-house banking solution, resulting in a simplified handling of payments at lower cost, says the vendor. (Source date: 29th May, 2008)

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